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 ended March 31, 2018

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

For the transition period from ___________________________ to ___________________________

Commission file number 333-197056

JIUCAITONG GROUP LIMITED

(Exact name of registrant as specified in its charter)

Nevada

38-3926700

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

56 Jianguo Rd,

Chaoyang Qu, Beijing, China

100020

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code

+86 001 400-004-8181

(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 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 þ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 þ 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	☐	Smaller reporting company	þ
(Do not check if smaller reporting company)
		Emerging growth company	þ

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 þ

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

As of May 15, 2018, 9,110,000 ordinary shares of the registrant were issued and outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	1
ITEM 1. FINANCIAL STATEMENTS	1
BALANCE SHEETS	1
STATEMENTS OF OPERATIONS	2
STATEMENTS OF CASH FLOWS	3
NOTES TO FINANCIAL STATEMENTS	4
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	30
ITEM 4. CONTROLS AND PROCEDURES	30

PART II – OTHER INFORMATION	31
ITEM 1. LEGAL PROCEEDINGS	31
ITEM 1A. RISK FACTORS	31
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	31
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	31
ITEM 4. MINE SAFETY DISCLOSURES	31
ITEM 5. OTHER INFORMATION	31
ITEM 6. EXHIBITS	31

SIGNATURES	32

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Jiucaitong Group Limited

Condensed Consolidated Balance Sheets

(Stated in US Dollars)

	March 31,			December 31,
	2018			2017
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	2,405,949		$	1,941,150
Restricted cash		190,837			184,437
Accounts receivable		21,010			522
Other receivable		84,104			19,327
Prepaid expenses		-			32,298
Advances to suppliers		19,958			49,672
Due from related parties		172,156			75,301
Total current assets		2,894,014			2,302,707

Non-current assets
Security Deposit		75,170			72,649
Property, plant and equipment, net		27,318			35,333
Total non-current assets		102,488			107,982

Total assets	$	2,996,502		$	2,410,689

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Current liabilities
Accrued liabilities	$	19,271		$	-
Other payable		279,802			133,093
Due to related parties		16,551			23,682
Advance from customers		249,847			114,191
VAT payable		104,881			195,308
Total current liabilities		670,352			466,274

Total liabilities		670,352			466,274

Commitments and contingencies

STOCKHOLDERS’ EQUITY
Common Stock, $0.0001 par value, 75,000,000 shares authorized; 9,110,000 and 9,110,000 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively		911			911
Additional paid-in capital		4,358,269			4,358,269
Accumulated deficit		(904,791	)		(1,214,945	)
Accumulated other comprehensive loss		(1,128,239	)		(1,199,820	)
Total stockholders’ equity		2,326,150			1,944,415
Total liabilities and stockholders’ equity	$	2,996,502		$	2,410,689

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

Jiucaitong Group Limited

Condensed Consolidated Statements of Operations and Comprehensive Income

(Stated in US Dollars)

(Unaudited)

	For the			For the
	Three Months Ended			Three Months Ended
	March 31,			March 31,
	2018			2017
Revenue	$	772,014		$	295,593

Operating expenses:
Selling expenses		31,605			30,750
General and administrative expenses		407,134			266,934
Total operating expenses		438,739			297,684

Income (loss) from operations		333,275			(2,091	)

Other income (expense):
Other income		16,639			21,499
Other expense		(54,059	)		(1,628	)
Gain from extinguishment of liability		14,299			-
Total other income (expense), net		(23,121	)		19,871

Income before provision for income taxes		310,154			17,780

Provision for income tax expense		-			-

Net income	$	310,154		$	17,780

Comprehensive Income:

Net income	$	310,154		$	17,780

Foreign currency translation adjustment		71,581			133,780

Comprehensive income	$	381,735		$	151,560

Earnings per common share – basic and diluted	$	0.03		$	0.00

Weighted average number of common shares outstanding – basic and diluted		9,110,000			8,000,000

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

Jiucaitong Group Limited

Condensed Consolidated Statements of Cash Flows

(Stated in US Dollars)

(Unaudited)

	For the			For the
	Three Months Ended			Three Months Ended
	March 31,			March 31,
	2018			2017
Cash flows from operating activities:
Net income	$	310,154		$	17,780
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation expenses		9,120			13,910
Gain from extinguishment of liability		(14,299	)		-
Changes in operating assets and liabilities:
Accounts receivable		(20,202	)		-
Other receivables		(63,268	)		1,374
Prepaid expense		32,982			-
Advances to suppliers		31,027			-
Security Deposit		-			-
Due from related parties		(93,011	)		(339,256	)
Due to related parties		-			3,660
Advance from customers		129,971			(22,562	)
Accrued liabilities		19,019			(117	)
Other payables		154,532			24,880
VAT payable		(95,933	)		17,870
Net cash provided by (used in) operating activities		400,092			(282,461	)

Cash flows from investing activities:
Working capital advances to related parties		-			(9,165,199	)
Repayments from related parties		-			6,407,007
Net cash used in investing activities		-			(2,758,192	)

Cash flows from financing activities:
Working capital advances from related parties		-			3,546,849
Repayments		(7,848	)		-
Net cash (used in) provided by financing activities		(7,848	)		3,546,849

Effect of exchange rate change on cash		72,555			(412	)

Net change in cash and cash equivalents		464,799			505,784

Cash and cash equivalents - beginning of period		1,941,150			12,924

Cash and cash equivalents - end of period	$	2,405,949		$	518,708

Supplemental disclosure of cash flow information
Interest paid	$	-		$	-
Income tax paid	$	-		$	-

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

Jiucaitong Group Limited

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 - NATURE OF OPERATIONS

Jiucaitong Group Limited and Subsidiaries (“Jiucaitong” or the “Company”), a Nevada Corporation (formerly Spirit International, Inc.), was incorporated on March 10, 2014. Through Beijing Jiucheng Asset Management Co., Ltd. (“Beijing Jiucheng”), the Company operates its business through an electronic online financial platform, www.9caitong.com (“website”). The Company generates revenue from the services that facilitate matching personal loan lender with individual and small and medium sized enterprises (“SME”) borrowers in China. Beijing Jiucheng was incorporated in Beijing, China on January 13, 2012 under the law of People’s Republic of China (“PRC” or “China”).

Reverse Merger

On August 1, 2017, Beijing Jiucheng IT Consulting Enterprise Co. Ltd. (“Jiucheng Consulting”), a wholly foreign-owned enterprise of I JIU JIU Limited (“I JIU JIU”), obtained the controlling interest of Beijing Jiucheng through a series of contractual arrangements including Equity Pledge Agreement, Exclusive Technical Consultancy and Services Agreement, Exclusive Call Option Agreement, Shareholder Proxy Agreement, and Operating Agreement (the “VIE Agreements”) wherein Beijing Jiucheng is considered as a variable interest entity (“VIE”).

On November 10, 2017, Jiucaitong, I JIU JIU Limited (“I JIU JIU”), the holding company of Ruixiang Technology Group,Ltd. (“Rui Xiang”), and the shareholders of I JIU JIU entered into the Share Exchange Agreement, which closed on the same date. Pursuant to the terms of the Share Exchange Agreement, Jiucaitong exchanged 8,000,000 shares of their common stock for all of the outstanding capital stock of I JIU JIU with the result that I JIU JIU became a wholly owned subsidiary of Jiucaitong.

Pursuant to the Merger, all of the issued and outstanding shares of I JIU JIU common stock were converted, at an exchange ratio of 160-for-1, into an aggregate of 8,000,000 shares of Spirit International Inc. common stock and I JIU JIU became a wholly owned subsidiary of Spirit International Inc. The holders of Spirit International Inc’s common stock as of immediately prior to the Merger held an aggregate of 5,110,000 shares and in connection with the Share Exchange Agreement, the Company’s majority shareholder, Kimho Consultants Company Limited, (“Kimho” or the “Majority Shareholder”) entered into a share cancellation agreement with I JIU JIU’s stockholders whereby Kimho, owning an aggregate of 4,000,000 shares of the Company’s Common Stock agreed to cancel all its 4,000,000 shares of Common Stock in exchange of $440,000 paid by I JIU JIU’s stockholders (“Share Cancellation”).

The accompanying financial statements share and per share information has been retroactively adjusted to reflect the exchange ratio in the Merger. Subsequent to the Merger, Spirit International Inc’s name was changed from “Spirit International, Inc.” to “Jiucaitong Group Limited.”.

Under generally accepted accounting principles in the United States, (“U.S. GAAP”) because I JIU JIU’s former stockholders received the greater portion of the voting rights in the combined entity and I JIU JIU’s senior management represents all of the senior management of the combined entity, the Merger was accounted for as a recapitalization effected by a share exchange, wherein I JIU JIU is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of I JIU JIU, its wholly-owned subsidiaries and Beijing Jiucheng have been brought forward at their book value and no goodwill has been recognized. Accordingly, the assets and liabilities and the historical operations that are reflected in the Company’s consolidated financial statements are those of I JIU JIU, its wholly-owned subsidiaries and Beijing Jiucheng and are recorded at their historical cost basis.

Unless otherwise indicated or the context otherwise requires, references to “the Company” refer to Jiucaitong Group Limited and Subsidiaries. Disclosures relating to the pre-merger business of I JIU JIU, unless noted as being the business of Spirit International, Inc., prior to the Merger, pertain to the business of I JIU JIU prior to the Merger.

NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company’s financial statements are expressed in U.S. dollars.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2017 and footnotes thereto included in the same document. The condensed consolidated balance sheet as of December 31, 2017 contained herein has been derived from the audited financial statements as of December 31, 2017 but does not include all disclosures required by the generally accepted accounting principles in the U.S. (“U.S. GAAP”).

Basis of Consolidation

The consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries, I JIU JIU, Ruixiang, Jiucheng Consulting and its VIE, Beijing Jiucheng. All inter-company transactions and balances have been eliminated upon consolidation.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Significant estimates as of and during the periods ended March 31, 2018 and December 31, 2017 include the allowance for doubtful accounts, the useful life of property and equipment, assumptions used in assessing impairment of long-term assets, valuation of deferred tax assets and accruals for taxes due.

Financial Instrument

The carrying amount reported in the consolidated balance sheet for cash, accounts receivable, other receivables, accrued liabilities and other payables approximate fair value because of the immediate or short-term maturity of these financial instruments.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The Company maintains with various financial institutions in the PRC. At March 31, 2018 and December 31, 2017, cash balances held in PRC banks are uninsured. The Company has not experienced any losses in bank accounts and believes it is not exposed to any risks on its cash in bank accounts.

Restricted Cash

Cash that is deposited in the bank but restricted for a specific purpose and therefore not available for immediate and general use by the Company is classified as restricted cash, which is presented separately from cash and cash equivalents on the consolidated balance sheets. The deposited balance is included in the Company’s bank account for guarantee of certain business purpose under an agreement until being used for the designated purpose or withdrawn due to expiration of the guarantee. As of March 31, 2018 and December 31, 2017, the Company had a restricted cash balance of $190,837 and $184,437, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and impairment losses. Gains or losses on dispositions of property and equipment are included in operating income (loss). Major additions, renewals and improvements are capitalized, while maintenance and repairs are expensed as incurred.

Depreciation and amortization are provided over the estimated useful lives of the assets using the straight-line method from the time the assets are placed in service. Estimated useful lives are as follows, taking into account the assets’ estimated residual value:

Classification		Estimated useful life
Computer and office equipment		3 years
Furniture		3 years
Vehicles		3 years

Advances from Customers

Advances from customers at March 31, 2018 and December 31, 2017 amounted to $249,847 and $114,191, respectively, and consist of prepayments from customers for services that have not been performed. The Company will recognize the deposits as revenue when the services have been performed in accordance with the Company’s revenue recognition policy.

Earnings per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income by the weighted-average number of common shares and dilutive potential common shares outstanding during the period.

For the three months ended March 31, 2018 and 2017, respectively, there were no outstanding securities or other contracts to issue common stock, such as options, warrants or conversion rights, which would have a dilutive effect on earnings per share.

Revenue Recognition

The Company provides intermediary services to the personal loan borrowers and the financial products investors. The Company charges fees for the intermediary services to the personal loan borrowers.

Prior to July 2017, the revenue process started when an individual who had financing needs submited the loan application to Beijing Hengjiu Investment Management Co., Ltd. (“Hengjiu”). Hengjiu, along with its sub-contractor, Zhongcheng Zhengxin (Beijing) Co., Ltd. (“Zhongcheng Zhengxin”), provided financial consulting services such as loan origination criteria checkup, risk assessment, and assessment/evaluation of vehicle collateral. Hengjiu is a related party which was 75% owned by Jiuyuan Investment Co., Ltd. (“Jiuyuan”), a shareholder of Beijing Jiucheng, and 25% owned by Xiangbin Meng, the Company’s Chairman. Zhongcheng Zhengxin is a third party who provides credit assessment services. Upon completion of the background check, Xiangbin Meng (“Meng”), the maker of the loan, entered into the loan agreement with the qualified loan borrowers and initiated the transfer of the cash to the borrowers or borrowers’ agents. The loan usually matures in three months and using borrowers’ vehicle as collateral.

After the borrowers received the fund transfer, the Company then packaged the debt claims of Meng into corresponding financial products and placed in its physical stores or on its on-line platform for sale. Investors of those financial products were able to choose the financial products that met their needs. Meng transfered his debt upon signing the debt transfer agreement with the financial products investors. The services were originally provided in physical stores in Beijing, Baoding, Hebei province and Weihai, Shandong province. Since April 2016, Beijing Jiucheng started to move majority of the business to its financial advisory on-line platform, Jiucaitong (www.9caitong.com). As less labor was required, in June 2016, Beijing Jiucheng shut down the physical stores in Baoding and Weihai.

Meng was responsible for making the loans, transferring the funds to the borrowers and collecting the service fees on behalf of all parties involved. Meng collected a portion of the service fees upfront and the rest on a monthly basis over the term of the loan from loan borrowers.

The Company recognizes revenue, net of value-added taxes in the periods in which the related services were performed provided that persuasive evidence of an arrangement exists, the amount of the service fee is fixed in the loan agreements, and collectability is reasonably assured. The revenue was recognized when the loan agreements were executed and the funds were transferred to the loan borrowers, based on the predetermined service fee percentage of the total loan principal over the term of the loan. According to the service fee allocation agreement, Beijing Jiucheng was entitled to a service fee of 1% of the loan principal per month before July 1, 2016 and 1.5% per month effective July 1, 2016 and thereafter as Beijing Jiucheng increased the loan management and risk assessment services that were originally done by Beijing Hengjiu since May 2016.

Since July 2017, the Company officially launched the bank depository system and is providing intermediary services for all registered users, including consultation, information and all kinds of delegation service. The Company started to charge the service fee from the amount borrowed by the borrower at the difference between the borrowers’ actual rate and the investors’ yield rate. Upon launching of the bank depository system, Meng no longer serves as the maker of the loan for the borrowers who use Jiucaitong on-line platform. The borrowers and investors enter the loan agreements directly with the online platform, Jiucaitong. Since December 2017, the online platform also provides loan intermediary services to the restaurant owners which operate the same as the rest of the borrowers except for that the restaurant owners use restaurants as collateral.

Allowance for Doubtful Accounts

Service fee receivable is recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. The Company makes estimates for the allowance for doubtful accounts based upon the assessment of various factors, including historical, experience, the age of the accounts receivable balances, credit quality of the loan borrowers, current economic conditions, and other factors that may affect the borrowers’ ability to pay. No allowance has been provided for at March 31, 2018 and December 31, 2017 as the service fees have been fully collected from the loan borrowers during the respective periods or subsequently.

Advertising Expense

The Company expenses advertising costs as they incurred. Total advertising expenses were $15,238 and $20,581 for the three months ended March 31, 2018 and 2017, respectively, and have been included as part of selling expenses in the accompanying statements of operations and comprehensive income.

Value-added Taxes

Pursuant to the PRC tax laws, in case of the financial services provided, generally the value added tax (“VAT”) rate is 3% of the gross sales for small scale VAT payer and 6% of the gross sales for general VAT payer. The accrued VAT is recorded as VAT payables in the consolidated financial statements. VAT is reported as a liability when incurred.

Income Taxes

The Company accounts for income taxes in accordance with U.S. GAAP for income taxes. Under the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes.

The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. Deferred tax liabilities are recognized for all future taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable income will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled.

Deferred tax is charged or credited in the operations of statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted by the U.S. government which included a wide range of tax reform affecting businesses including the corporate tax rates, international tax provisions, tax credits and deduction with majority of the tax provision effective after December 31, 2017.

Certain activities conducted in foreign jurisdictions may result in the imposition of U.S. corporate income taxes on the Company when its subsidiaries, controlled foreign corporations (“CFCs”), generate income that is subject to Subpart F or GILTI under the U.S. Internal Revenue Code beginning after December 31, 2017.

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. As of March 31, 2018 and December 31, 2017, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

Foreign Currency Translation

The functional currency of the Company’s operations in the PRC is the Chinese Yuan or Renminbi (“RMB”). The financial statements are translated to U.S. dollars using the period end rates of exchange for assets and liabilities, equity is translated at historical exchange rates, and average rates of exchange (for the period) are used for revenues and expenses and cash flows. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income / loss. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

All of the Company’s revenue transactions are transacted in its functional currency. The Company does not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

Asset and liability accounts at March 31, 2018 and December 31, 2017 were translated at 6.2881 RMB to $1.00 and at 6.5063 RMB to $1.00, respectively, which were the exchange rates on the balance sheet dates. Equity accounts were stated at their historical rates. The average translation rates applied to the statements of operations for the three months ended March 31, 2018 and 2017 were 6.3714 RMB and 6.8925 RMB to $1.00, respectively. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate.

Credit Risk and Concentration

The Company’s financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents. The majority of cash equivalents consists of short-term money market funds, which are managed by reputable financial institutions.

The Company performs ongoing credit evaluations of borrowers, and generally do not require additional collateral except for personal vehicles. No borrowers represented 10% or more of total revenue for the three months ended March 31, 2018 and 2017.

Comprehensive Income (Loss)

Other comprehensive income (loss) refers to revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income (loss) but are excluded from net income (loss) as these amounts are recorded directly as an adjustment to stockholders’ equity. The Company’s other comprehensive income (loss) is comprised of foreign currency translation adjustments.

Fair Value Measurements

The Company applies the provisions of ASC Subtopic 820-10,” Fair Value Measurements”, for fair value measurements of financial assets and financial liabilities and for fair value measurements of non-financial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

●

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

●

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

●

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

There were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of March 31, 2018 and December 31, 2017.

Related Parties

A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

Recent Accounting Pronouncements

Revenue Recognition: In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016-08) which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The new revenue recognition standard will be effective for us in the first quarter of 2018, with the option to adopt it in the first quarter of 2017. The Company currently anticipates adopting the new standard effective January 1, 2018. The new standard also permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). The Company elected the modified retrospective approach. In preparation for adoption of the new guidance, we reviewed representative samples of contracts and other agreements we had entered into with our customers and evaluated the five-step model specified by the new revenue standards. The Company completed its analysis and identified changes with respect to the timing of revenue recognition for its revenue streams and determined the impact of that guidance on revenue recognition. This standard does not have a material impact on the Company’s interim condensed consolidated financial statements.

Leases: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. The Company does not anticipate that this adoption will have a significant impact on its financial position, results of operations, or cash flows.

Statement of Cash Flows: In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): The amendments in this Update apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. The amendments in this Update provide guidance on the following eight specific cash flow issues. The amendments are an improvement to GAAP because they provide guidance for each of the eight issues, thereby reducing the current and potential future diversity in practice described above. ASU 2016-15 is effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This standard does not have a material impact on the Company’s interim condensed consolidated financial statements.

Statement of Cash Flows: In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): “Restricted Cash”(“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This update is effective in fiscal years, including interim periods, beginning after December 15, 2017 and early adoption is permitted. The adoption of this guidance will result in the inclusion of the restricted cash balances within the overall cash balance and removal of the changes in restricted cash activity, which are currently recognized in other financing activities, on the Statements of Consolidated Cash Flows. Furthermore, an additional reconciliation will be required to reconcile Cash and cash equivalents and restricted cash reported within the Consolidated Balance Sheets to sum to the total shown in the Statements of Consolidated Cash Flows. This standard does not have a material impact on the Company’s interim condensed consolidated financial statements.

Business Combination: In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. The Company has adopted this guidance effective in the first quarter of 2018 on a prospective basis. This standard does not have a material impact on the consolidated financial statements until the Company plans to have an acquisition or deconsolidation in the future.

Revenue Recognition and Leases: In September 2017, the FASB issued ASU 2017-13, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842). The main objective of this pronouncement is to clarify the effective date of the adoption of ASC Topic 606 and ASC Topic 842 and the definition of public business entity as stipulated in ASU 2014-09 and ASU 2016-02. ASU 2014-09 provides that a public business entity and certain other specified entities adopt ASC Topic 606 for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. All other entities are required to adopt ASC Topic 606 for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. ASU 2016-12 requires that “a public business entity and certain other specified entities adopt ASC Topic 842 for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. All other entities are required to adopt ASC Topic 842 for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020”. ASU 2017-13 clarifies that the SEC would not object certain public business entities to elect to use the non-public business entities effective dates for applying ASC 606 and ASC 842. ASU 2017-13, however, limits such election to certain public business entities that “otherwise would not meet the definition of a public business entity except for a requirement to include or inclusion of its financial statements or financial information in another entity’s filings with the SEC”. The Company elected to adopt ASC Topic 606 and ASC Topic 842 beginning January 1, 2018 and January 1, 2019, respectively. No material impact on the consolidated financial statements.

Except for the ASU above, in the period from February 2018 through March 2018, the FASB has issued ASU No. 2018-02 through ASU 2018-04, which are not expected to have a material impact on the consolidated financial statements upon adoption.

NOTE 3 – OTHER RECEIVABLE

Other receivable consists of deposits and advances made to employees and other third parties to pay for operating expenses, such as property maintenance, water and sewer, and telephone bills. Other receivable as of March 31, 2018 and December 31, 2017 were $84,104 and $19,327, respectively.

NOTE 4 – SECURITY DEPOSIT

Pursuant to the terms of the Jinchangan Lease agreement, Beijing Jiucheng agreed to pay three months of rent and maintenance fee as security deposit for a total of RMB 472,678 (approximately $75,000). Beijing Jiucheng classified the security deposit as long term asset on the consolidated balance sheets as the lease expires on May 21, 2019.

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

	March 31,			December 31,
	2018			2017
Office furniture	$	24,993		$	24,155
Computer and office equipment		43,387			41,932
Vehicle		114,586			110,743
Total property and equipment		182,966			176,830
Less: accumulated depreciation		(155,648	)		(141,497	)
Total	$	27,318		$	35,333

Total depreciation expenses for the three months ended March 31, 2018 and 2017 were $9,120 and $13,910, respectively.

The Company did not capitalize the costs associated with building the online financial platform as the costs were nominal.

NOTE 6 - RELATED PARTY TRANSACTIONS

The following is a list of related parties to which the Company has transactions with:

(a)

Xiangbin Meng (“Meng”), the Company’s Chairman and a shareholder of Beijing Jiucheng;

(b)

Jiuyuan Investment Co., Ltd. (“Jiuyuan”), a shareholder of Beijing Jiucheng;

(c)

Beijing JiuCheng Huijin Information Consulting Co., Ltd (“Jiucheng Huijin”), an affiliated Company;

(d)

Yasheng International Investment Ltd. (“Yasheng”), a former shareholder of Beijing Jiucheng;

(e)

Beijing Jiuyuan Investment Share Holding Co., Ltd (“Beijing Jiuyuan”), an affiliated Company;

	(f)	Beijing Jiuxiang Financing Lease Co., Ltd. (“Jiuxiang”), an affiliated Company.

	(g)	Beijing Hengjiu Investment Management Co.,Ltd (“Beijing Hengjiu”), an affiliated Company

	(h)	Yangming Development Limited (“Yangming”), a shareholder of the Company

Amount due from related parties:

Amount due from related parties consisted of the following as of:

	March 31, 2018		December 31, 2017
Xiangbin Meng – Fees Receivable	$	97,997	$	3,444
Jiuyuan		20,873		20,204
Beijing Hengjiu		53,286		51,653
Total	$	172,156	$	75,301

Prior to July 2017, Meng collected the service fees from the loan borrowers on behalf of the Company, Zhongcheng Zhengxin, and Hengjiu. Meng then distributed to each party in accordance to the predetermined service fees percentage. As of March 31, 2018 and December 31, 2017, amount due from Meng for service revenue collected by Meng on the Company’s behalf and not yet distribute to the Company was $97,997 and $3,444, respectively.

Beijing Jiucheng is 70% owned by Jiuyuan. From time to time, the Company and Jiuyuan paid general and administrative expenses for each other. During the three months ended March 31, 2018 and 2017, Jiuyuan paid on behalf of the Company for working capital totaled $31 and $3,660, respectively. The Company made advances to Jiuyuan for working capital totaled $0 and $9,165,199, respectively and received repayments totaled $-0- and $5,415,895, respectively. The Company received advances from Jiuyuan for working capital totaled $0 and $3,576,355, respectively. As of March 31, 2018 and December 31, 2017, the Company has an amount due from Jiuyuan of $20,873 and $20,204, respectively.

Beijing Hengjiu is 75% owned by Jiuyuan and 25% owned by Meng. During the three months ended March 31, 2018 and 2017, Beijing Hengjiu paid on behalf of the Company for working capital totaled $157 and $-0-, respectively. As of March 31, 2018 and December 31, 2017, the Company has an amount due from Beijing Hengjiu of $53,286 and $51,653, respectively.

Amount due to related parties

Amount due to related parties consisted of the following as of:

	March 31, 2018		December 31, 2017
Jiucheng Huijin		2,601		10,199
Beijing Jiuyuan		2,545		2,460
Jiuxiang		6,298		6,087
Yangming		5,107		4,936
Total	$	16,551	$	23,682

Jiucheng Huijin is 30% owned by Meng. From time to time, Jiucheng Huijin paid general and administrative expenses on behalf of the Company. As of March 31, 2018 and December 31, 2017, the Company recorded $2,601 and $10,199 due to Jiucheng Huijin, respectively.

On June 30, 2016, Jiucheng Huijin entered a contract to lease two vehicles from the Company. The contract started on June 30, 2016 and expired on January 31, 2018. Pursuant to the terms of the contract, Jiucheng Huijin has agreed to pay a monthly rental fee of RMB 25,000 (approximately $3,600) per vehicle. The Company recorded a rental income of $7,848 and $21,763 for the three months ended March 31, 2018 and 2017, respectively as part of other income in the accompanying condensed consolidated statements operations and comprehensive income.

Beijing Jiuyuan is 51% owned by Meng. On October 21, 2015, Beijing Jiuyuan entered into a six-year lease (“Chaoyang Lease”) and the lease was subsequently transferred to Jiuxiang on August 12, 2016. The Company shares the office space with Beijing Jiuyuan and three other affiliated companies under the Chaoyang Lease. The rent expense allocated to the Company each month is in accordance to the number of employees occupied in the office space. As of March 31, 2018 and December 31, 2017, amounts due to Beijing Jiuyuan related to rent expense were $2,545 and $2,460, respectively.

Jiuxiang is 75% owned by Jiuyuan. As mentioned above, Jiuxiang took over the lease since August 12, 2016. As of March 31, 2018 and December 31, 2017, the Company recorded $6,298 and $6,087 due to Jiuxiang, respectively, for the rent expense.

Yangming owns 26.3% of the Company. Yangming paid general and administrative expenses on behalf of the Company, As of March 31, 2018 and December 31, 2017, the Company recorded $5,107 and $4,936 due to Yangming, respectively.

For the three months ended March 31, 2018 and 2017, due to (from) related party activities consisted of the following:

	Jiuyuan			Meng		Meng - Receivable			Yasheng		Jiucheng Huijin			Beijing Jiuyuan		Jiuxiang		Beijing Hengjiu			Yangming		Total
Balance due (from) to related parties, December 31, 2017	$	(20,204	)	$	-	$	(3,444	)	$	-	$	10,199		$	2,460	$	6,087	$	(51,653	)	$	4,936	$	(51,619	)
Operating activities - Due from related parties		31			-		(93,199	)		-		-			-		-		157			-		(93,011	)
Financing activities - Repayments to related parties		-			-		-			-		(7,848	)		-		-		-			-		(7,848	)
Effect of foreign currency exchange		(700	)		-		(1,354	)		-		250			85		211		(1,790	)		171		(3,127	)
Balance due (from) to related parties, March 31, 2018	$	(20,873	)	$	-	$	(97,997	)	$	-	$	2,601		$	2,545	$	6,298	$	(53,286	)	$	5,107	$	(155,605	)

		Jiuyuan			Meng			Meng - Receivable			Yasheng		Jiucheng Huijin			Beijing Jiuyuan			Jiuxiang			Beijing Hengjiu		Yangming		Total
Balance due (from) to related parties, December 31, 2016	$	378,950		$	(11,311,447	)	$	(1,877,130	)	$	8,917	$	5,867		$	2,304		$	1,263		$	-	$	-	$	(12,791,276	)
Operating activities - Due from related parties		-			-			(315,707	)		-		(20,950	)		(2,322	)		(277	)		-		-		(339,256	)
Operating activities - Due to related parties		3,660			-			-			-		-			-			-			-		-		3,660
Investing activities - Working capital advances to related parties		(9,165,199	)		-			-			-		-			-			-			-		-		(9,165,199	)
Investing activities - Repayments from related parties		5,415,895			991,112			-			-		-			-			-			-		-		6,407,007
Financing activities - Advances from related parties		3,576,355			(29,506	)		-			-		-			-			-			-		-		3,546,849
Non-cash Capital reduction		8,124,744			3,482,033			-			-		-			-			-			-		-		11,606,777
Internal transfers		(8,174,148	)		6,953,828			1,220,320			-		-			-			-			-		-		-
Effect of foreign currency exchange		2,697			(115,497	)		(13,186	)		59		59			18			8			-		-		(125,842	)
Balance due (from) to related parties, March 31, 2017	$	162,954		$	(29,477	)	$	(985,703	)	$	8,976	$	(15,024	)	$	-		$	994		$	-	$	-	$	(857,280	)

NOTE 7 – OTHER PAYABLE

Other payable consists of the following as of March 31, 2018 and December 31, 2017:

	March 31, 2018		December 31, 2017
Social security and provident fund payable	$	206,096	$	44,254
Salary payable		61,082		64,653
Other levies		12,624		24,186
Total	$	279,802	$	133,093

NOTE 8 – VAT PAYABLE

The Company’s VAT payable consists of 6% on the revenue generated and 3% on the other income generated from car leasing. VAT payable as of March 31, 2018 and December 31, 2017 were $104,881 and $195,308, respectively. The Company is currently reviewing its historical VAT tax returns and will make appropriate amendments where applicable. The VAT payable has been properly accrued for based on the required VAT rate as of March 31, 2018 and December 31, 2017.

NOTE 9 - STATUTORY RESERVE

Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable “statutory surplus reserve fund”. Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). The Company did not make appropriations to statutory reserve as of March 31, 2018 as the Company is able to use the current period (2018) net income after tax to offset against the accumulate loss from prior periods.

NOTE 10 - EQUITY TRANSACTIONS

Capital reduction of VIE, Beijing Jiucheng

Upon formation, Meng contributed RMB 30,000,000 ($4,800,811) and Jiuyuan contributed RMB 70,000,000 ($11,201,893) for a total of RMB 100,000,000 ($16,002,704) to Beijing Jiucheng. As Beijing Jiucheng’s main revenue source is from intermediary services and management was not anticipating to make significant capital expenditures, on February 15, 2017, the Board of directors of Beijing Jiucheng proposed to reduce the capital. Upon approval by the majority shareholders and Board of Directors of Beijing Jiucheng, on February 15, 2017, Beijing Jiucheng reduced the contributed capital from RMB 100,000,000 ($16,002,704) to RMB 20,000,000 ($4,482,799). Beijing Jiucheng has obtained the new business license reflecting the change. Capital reduction made subsequent to December 31, 2016 for the two shareholders are as follows:

In RMB:

	Formation		Capital Reduction			After Reduction		Ownership
Meng		30,000,000		(24,000,000	)		6,000,000		30	%
Jiuyuan		70,000,000		(56,000,000	)		14,000,000		70	%
		100,000,000		(80,000,000	)		20,000,000		100	%

In USD:

	Formation		Capital Reduction			After Reduction		Ownership
Meng		4,800,811		(3,455,971	)		1,344,840		30	%
Jiuyuan		11,201,893		(8,063,934	)		3,137,959		70	%
		16,002,704		(11,519,905	)		4,482,799		100	%

A debt transfer agreement was signed between Meng and Jiuyuan on February 28, 2017. Pursuant to the terms of the agreement, Jiuyuan agreed to transfer to Meng a total of RMB 56,340,519 ($8,112,967) owed by Beijing Jiucheng.

On February 28, 2017, a debt offset agreement was signed between Beijing Jiucheng and Meng and pursuant to the terms of this agreement, the amount due to Jiuyuan which was transferred to Meng plus Meng’s portion of the capital reduction were offset by the amount due from Meng. As a result of the capital reduction, the debt offset agreement and repayment received, the amount due from related parties, Meng that was reclassified as contra-equity account at December 31, 2016 has been repaid and reduced to zero by $11,519,905 during the first quarter ended March 31, 2017.

Subscription receivable of the subsidiaries’ paid in capital

As of March 31, 2018 and December 31, 2017, the subscription receivable of the subsidiaries’ paid in capital (I JIU JIU and Ruixiang) was $51,289.

Reverse merger

Pursuant to the Merger, all of the issued and outstanding shares of I JIU JIU common stock were converted, at an exchange ratio of 160-for-1, into an aggregate of 8,000,000 shares of the Company or Jiucaitong, formerly known as Spirit International Inc. common stock and I JIU JIU became a wholly owned subsidiary of the Company or Jiucaitong. The holders of the Company’s common stock as of immediately prior to the Merger held an aggregate of 5,110,000 shares and in connection with the Share Exchange Agreement, the Company’s former majority shareholder, Kimho Consultants Company Limited, (“Kimho” or the “Majority Shareholder”) entered into a share cancellation agreement with I JIU JIU’s stockholders whereby Kimho, owning an aggregate of 4,000,000 shares of the Company’s Common Stock agreed to cancel all its 4,000,000 shares of Common Stock in exchange of $440,000 paid by I JIU JIU’s stockholders (“Share Cancellation”).

The common stocks as of March 31, 2018 and December 31, 2017 were 9,110,000 shares.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company shares its principal office with four other affiliated companies in Chaoyang, Beijing. On October 21, 2015, the Company entered into a six-year lease (“Chaoyang Lease”) and the lease was subsequently transferred to Jiuxiang on August 12, 2016. The Chaoyang Lease started on October 21, 2015 and expires on October 20, 2021. Pursuant to the terms of the lease, Jiuxiang has agreed to pay a monthly rent of RMB 491,168 (approximately $74,000) for the first three years and RMB 540,534 (approximately $81,000) for the remaining three years. The Company recognizes rent expense on a straight-line basis over the terms of the leases. The rent expense allocated to the Company each month is in accordance to the number of employees occupied in the office space.

The Company operates its business in an office located at Xizhimen, Beijing, China. The Company entered into a lease agreement (“Xizhimen Lease”) on January 1, 2015 pursuant to which the Company agreed to pay $24,000 per month and the lease expired on May 31, 2017.

On May 22, 2017, the Company entered into another operating lease agreement in Beijing as the successor of the Xizhimen Lease. Pursuant to the terms of the agreement, the lease started from May 22, 2017 and expires on May 21, 2019 and the Company agreed to pay monthly rent of RMB 142,241 (approximately $20,000) from June 22, 2017 to May 21, 2019 with the first month rent free and monthly maintenance fee of RMB 15,318 (approximately $2,200) from May 21, 2017 to May 21, 2019. The Company recognizes rent expense and maintenance fee on a straight-line basis over the terms of the lease.

As of March 31, 2018, the Company was obligated under operating leases minimum rentals as follows:

	Allocated Lease *		Non-Cancellable Lease **		Total
2018	$	4,393	$	289,371	$	293,764
2019		4,393		112,792		117,185
2020		4,393		-		4,393
2021		3,661		-		3,661
2022		-		-		-
Total minimum lease payments	$	16,840	$	402,163	$	419,003

These are the Company’s portion of minimum lease payments allocated by the Company’s affiliated company, Jiuxiang, the leasee.

These are the minimum lease payments under the non-cancellable lease entered with a third party.

NOTE 12 - SUBSEQUENT EVENT

On April 23, 2018, a related party of the Company, Jiuyuan, entered into a loan agreement with Jiucheng to borrow 15,000,000 RMB (approximately $2.39 million). The loan matures in six months with a monthly interest rate of 0.3625%. The Company recorded a loan receivable from the related party accordingly. The amount will be repaid by the related party before June 30, 2018.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains certain statements that may be deemed “forward-looking statements” within the meaning of United States of America securities laws. All statements, other than statements of historical fact, that address activities, events or developments that we intend, expect, project, believe or anticipate and similar expressions or future conditional verbs such as will, should, would, could or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.

These statements include, without limitation, statements about our anticipated expenditures, including those related to general and administrative expenses; the potential size of the market for our services, future development and/or expansion of our services in our markets, our ability to generate revenues, our ability to obtain regulatory clearance and expectations as to our future financial performance. Our actual results will likely differ, perhaps materially, from those anticipated in these forward-looking statements as a result of various factors, including: our need and ability to raise additional cash. The forward-looking statements included in this report are subject to a number of additional material risks and uncertainties, including but not limited to the risks described in our filings with the Securities and Exchange Commission.

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes to those statements included in this filing. In addition to historical financial information, this discussion may contain forward-looking statements reflecting our current plans, estimates, beliefs and expectations that involve risks and uncertainties. As a result of many important factors, particularly those set forth under “Special Note Regarding Forward-Looking Statements”, our actual results and the timing of events may differ materially from those anticipated in these forward-looking statements.

Overview

Jiucaitong Group Limited was incorporated in Nevada (“Company”) on March 10, 2014, under the name of “Spirit International, Inc.;” we amended our Articles of Incorporation and changed our corporate name to Jiucaitong Group Limited on November 27, 2017 (the “Name Change”). On November 10, 2017, the Company consummated a share exchange (the “Share Exchange”) with I JIU JIU Limited, a British Virgin Islands company (“I JIU JIU”). Pursuant to and following the Share Exchange, we changed our corporate name and discontinued our pre-Share Exchange business such that the businesses of Beijing Jiucheng became our businesses. We are currently a holding company and operate through our wholly-owned subsidiaries, I JIU JIU, Ruixiang Technology Group, Ltd., a Hong Kong company (“Ruixiang”) and Beijing Jiucheng IT Consulting Enterprise Co. Ltd, a company organized in the People’s Republic of China (“Jiucheng Consulting” or “WFOE”) and our contractually controlled and managed company, Beijing Jiucheng Asset Management Co., Ltd., a company organized in the People’s Republic of China (“Beijing Jiucheng”). Beijing Jiucheng operates an electronic online financial platform, “www.9caitong.com,” which is designed to match investors with small and medium-sized enterprises (“SMEs”) and individual borrowers in China. We believe our services provide an effective solution for under-served SME and individual borrowers who need access to financing.

We generate revenue from our services that facilitate matching lenders, who we refer to as investors, with individual and SME borrowers. We typically charge borrowers a loan facilitation process and matching services fee between 1% and 1.5% per month of the loan amount, depending on the duration of the loan, for each effected loan facilitated by us. Additionally we charge a separate fee from borrowers for each loan repayment facilitated by us, which is based on an agreed upon percentage of approximately 0.5% of the total loan amount per month for the duration of the loan.

Critical Accounting Policies

Basis of Presentation

Basis of Consolidation

Use of Estimates and Assumptions

Financial Instrument

The carrying amount reported in the consolidated balance sheets for cash, accounts receivable, other receivables, accrued liabilities and other payables approximate fair value because of the immediate or short-term maturity of these financial instruments.

Cash and Cash Equivalents

Restricted Cash

Earnings per share

Basic earnings per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares and dilutive potential common shares outstanding during the period.

Revenue Recognition

The Company provides intermediary services to the personal loan borrowers and the financial products investors. The Company charges fees for the intermediary services to the personal loan borrowers.

Since July 2017, the Company officially launched the bank depository system and provided intermediary services for all registered users, including consultation, information and all kinds of delegation service. The Company started to charge the service fee from the amount borrowed by the borrower at the difference between the borrowers’ actual rate and the investors’ yield rate. Upon launching of the bank depository system, Meng no longer serves as the maker of the loan for the borrowers who use Jiucaitong on-line platform. The borrowers and investors enter the loan agreements directly with the online platform, Jiucaitong. Since December 2017, the online platform also provides loan intermediary services to the restaurant owners which operate the same as the rest of the borrowers except for that the restaurant owners use restaurants as collateral.

Allowance for Doubtful Accounts

Advertising Expense

The Company expenses advertising costs as they incurred. Total advertising expenses were $15,238 and $ 20,581 for the three months ended March 31, 2018 and 2017, respectively, and have been included as part of selling expenses in the accompanying condensed consolidated statements of operations and comprehensive income.

Value-added Taxes

Income Taxes

Foreign Currency Translation

Credit Risk and Concentration

Comprehensive Income (Loss)

Fair Value Measurements

●

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

●

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

There were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of March 31, 2018 and December 31, 2017.

Related Parties

Recent Accounting Pronouncements

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016-08) which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The new revenue recognition standard will be effective for us in the first quarter of 2018, with the option to adopt it in the first quarter of 2017. The Company currently anticipates adopting the new standard effective January 1, 2018. The new standard also permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). The Company elected the modified retrospective approach. In preparation for adoption of the new guidance, we reviewed representative samples of contracts and other agreements we had entered into with our customers and evaluated the five-step model specified by the new revenue standards. . The Company completed its analysis and identified changes with respect to the timing of revenue recognition for its revenue streams and determined the impact of that guidance on revenue recognition. This standard does not have a material impact on the Company’s interim condensed consolidated financial statements.

Statement of Cash Flows: In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): “Restricted Cash”(“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This update is effective in fiscal years, including interim periods, beginning after December 15, 2017 and early adoption is permitted. The adoption of this guidance will result in the inclusion of the restricted cash balances within the overall cash balance and removal of the changes in restricted cash activity, which are currently recognized in other financing activities, on the Statements of Consolidated Cash Flows. Furthermore, an additional reconciliation will be required to reconcile Cash and cash equivalents and restricted cash reported within the Consolidated Balance Sheets to sum to the total shown in the Statements of Consolidated Cash Flows. The Company anticipates adopting this new guidance effective January 1, 2018. This standard does not have a material impact on the Company’s interim condensed consolidated financial statements.

Business Combination: In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. The Company has adopted this guidance effective for us in the first quarter of 2018 on a prospective basis. This standard does not have a material impact on our consolidated financial statements until the Company plans to have an acquisition or deconsolidation in the future.

Results of Operations

The following discussion should be read in conjunction with the Financial Statement of the Company for the three months ended March 31, 2018 and 2017 and related notes thereto.

Revenue

We have recognized $772,014 and $295,593 revenue for the three months ended March 31, 2018 and 2017, respectively. Prior to July 2017, our service fee was at 1.5% per month of the loan principal. Since July 2017, we started to charge the service fee as the spread between the borrowers’ interest rate and the investors’ yield rate. We had a total of 554 contracts signed for the three months ended March 31, 2018 compared to 279 contracts for the three months ended March 31, 2017.

Operating Expenses

Selling expenses: Our selling expenses primarily consist of expenses relating to advertising, marketing and promotional trips and other community activities for brand promotion purpose. Selling expenses increased from $30,750 for the three months ended March 31, 2017 to $31,605 for the three months ended March 31, 2018. An increase of $855, or 2.71%, was primarily attributable to the increase of the online interactive promotion expenses.

General and administrative expenses: Our general and administrative expenses for the three months ended March 31, 2018 and 2017 consisted of the following:

	Three Months Ended
	March 31,							Percentage
	2018		2017		Change			Change
Payroll and related benefits	$	201,254	$	108,408	$	92,846			86	%
Depreciation expense		9,120		13,910		(4,790	)		(34	%)
Software service fee		26,209		35,715		(9,506	)		(27	%)
Rent and property management expense		71,397		77,388		(5,991	)		(8	%)
Professional fee		96,370		13,319		83,051			624	%
Other		2,784		18,194		(15,410	)		(85	%)
Total	$	407,134	$	266,934	$	140,200			53	%

●

Payroll and related benefits for the three months ended March 31, 2018 increased by $ 92,846, or 86%, as compared to the three months ended March 31, 2017. We had more employees in 2018 as our online business expansion.

●

Depreciation expense for the three months ended March 31, 2018 decreased by $ 4,790, or 34%, as compared to the three months ended March 31, 2017. In the mid of 2017, there were a portion of the fixed assets that have already been fully depreciated. Therefore, they no longer incur depreciation expense in the 2018.

●

Software service fee for the three months ended March 31, 2018 decreased by $ 9,506, or 27%, as compared to the three months ended March 31, 2017. The decrease was primarily attributable to real-name certification fees of our on-line business occurred in 2017,we did not incur such expense during the three months ended March 31, 2018.

●

Rent and property management expense for the three months ended March 31, 2018 decreased by $5,991, or 8%, as compared to the three months ended March 31, 2017. The majority of the change was attributable to the decrease in rent in the monthly rent for the new lease in Beijing was less than the prior lease.

●

Professional fee for the three months ended March 31, 2018 increased by $ 83,051, or 624%, as compared to the three months ended March 31, 2017. The increase was primarily attributable to legal fees, audit fees, and other consulting fees of listed company service fees occurred in 2018, We did not incur such expense during the three months ended March 31, 2017.

●

Other general and administrative expenses for the three months ended March 31, 2018 decreased by $15,410, or 85%, as compared to the three months ended March 31, 2017. The decrease was primarily attributable to the decrease in travel, seminar, printing, and car insurance expenses.

Income (loss) from operations

As a result of the factors described above, for the three months ended March 31, 2018, income from operations amounted to $333,275, as compared to loss from operations of $(2,091) for the three months ended March 31, 2017.

Other income (expenses)

Other income: Other income decreased from $21,499 for the three months ended March 31, 2017 to $16,639 for the three months ended March 31, 2018. A decrease of $ 4,860 was primarily attributable to decrease of the vehicle leasing income. On June 30, 2016, Jiucheng Huijin, a related party, and the Company entered a contract to lease two vehicles from the Company. The contract started on June 30, 2016 and expired on January 31, 2018. Pursuant to the terms of the contract, Jiucheng Huijin had agreed to pay a monthly rental fee of RMB 25,000 (approximately $3,600) per vehicle. We recorded three months of such income in 2017 and one month in 2018.

Other expense: Other expense increased from 1,628 for the three months ended March 31, 2017 to $54,059 for the three months ended March 31, 2018. The increase was primarily attributable to the increase of cash transfer volumes as we launched the bank depository system in July 2017.

Gain from extinguishment of liability: As of March 31, 2018, we recorded $14,299 due to Hong Long Trading Co., Ltd. Hong Long was closed and ceased in business during 2017 and we have no one to pay the liability to as the vendor is no longer exist. Accordingly, we wrote off the liability and recorded a gain from extinguishment of liability in the amount of $14,299 as of March 31, 2018.

Income tax provision

As a result of accumulated net operating losses incurred that allowable tax deductions are greater than its taxable income, there has been no provision for income taxes from the date of inception. The Company has provided full valuation allowance for the deferred tax assets at March 31, 2018 and 2017, which arising from the losses incurred since inception.

Net income

As a result of the factors described above, for the three months ended March 31, 2018, net income amounted to $ 310,154, as compared to net income of $ 17,780 for the three months ended March 31, 2017.

Foreign currency translation loss

The functional currency of our operations in the PRC is the Chinese Yuan or Renminbi (“RMB”). The financial statements are translated to U.S. dollars using the period end rates of exchange for assets and liabilities, equity is translated at historical exchange rates, and average rates of exchange (for the period) are used for revenues and expenses and cash flows. Transaction gains and or losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. As a result of foreign currency translations, which are a noncash adjustment, we reported a foreign currency translation gain of $ 71,581 for the three months ended March 31, 2018, as compared to a foreign currency translation gain of $ 133,775 for the three months ended March 31, 2017. The noncash gain had the effect of increasing our reported comprehensive income for the three months ended March 31, 2018 and 2017.

Comprehensive income (loss)

As a result of our foreign currency translation loss, we had comprehensive income for the three months ended March 31, 2018 of $381,735 compared to comprehensive income of $151,560 for the three months ended March 31, 2017.

Liquidity and Capital Resources

As of March 31, 2018, we had a cash balance of $2,405,949. During the three months ended March 31, 2018, net cash provided by operating activities totaled to $400,092. Net cash used in financing activities totaled to $7,848 in connection with repayment of working capital advances from our related parties. Effect of exchange rate change on cash totaled $72,555. The resulting change in cash for the period was an increase of $464,799, which was primarily due to reduction of cash outflow with related parties and net cash generated from our operating activities.

As of March 31, 2017, we had a cash balance of $518,708. During the three months ended March 31, 2017, net cash used in operating activities totaled to $282,461. Net cash used in investing activities totaled to $ 2,758,192 in connection with working capital advances made to and received repayments from our related parties. Net cash provided by financing activities totaled to $3,546,849 in connection with working capital advances received from our related parties. Effect of exchange rate change on cash totaled $412. The resulting change in cash for the period was an increase of $505,784, which was primarily due to working capital advances received from related parties.

The following table sets forth a summary of changes in cash flow from the three months ended March 31, 2018 to March 31, 2017:

	Three Months Ended
	March 31,									Percentage
	2018			2017			Change			Change
Net cash provided by (used in) operating activities	$	400,092		$	(282,461	)	$	682,553			242	%
Net cash used in investing activities		-			(2,758,192	)		2,758,192			100	%
Net cash (used in) provided by financing activities		(7,848	)		3,546,849			(3,554,697	)		(100	%)
Effect of exchange rate change on cash		72,555			(412	)		72,967			17,710	%
Total net change in cash and cash equivalents	$	464,799		$	505,784		$	(40,985	)		(8	%)

Net cash provided by (used in) operating activities increased by $682,553 to $400,092 during the three months ended March 31, 2018 from ($282,461) during the three months ended March 31, 2017. This increase is primarily attributable to:

●

An increase in net income of$292,374

●

A decrease in other receivables of$ 64,642

●

An increase in amount due from related parties of $246,245

●

An increase in advance from customers of $152,533

· An increase in other payables of $129,652

· A decrease in VAT payable of $113,803

Net cash used in investing activities was $-0- for the three months ended March 31, 2018 as compared to $ 2,758,192 for the three months ended March 31, 2017. During the three months ended March 31, 2017, we made advances to our related parties for working capital totaled $9,165,199 and received repayment from our related partiers totaled $ 6,407,007.

Net cash provided by (used in) financing activities was ($7,848) for the three months ended March 31, 2018 as compared to $ 3,546,849 for the three months ended March 31, 2017. During the three months ended March 31, 2018, we made repayment to our related parties totaled $7,848. During the three months ended March 31, 2017, we received working capital advances from our related parties totaled $3,546,849.

The following table sets forth a summary of changes in our working capital from December 31, 2017 to March 31, 2018:

	March 31,		December 31,				Percentage
	2018		2017		Change		Change
Current Assets	$	2,894,014	$	2,302,707	$	591,307		26	%
Current Liabilities		670,352		466,274		204,078		44	%
	$	2,223,662	$	1,836,433	$	387,229		21	%

Our working capital increased by $387,229 to $2,223,662 at March 31, 2018 from $1,836,433 at December 31, 2017. This increase in working capital is primarily attributable to:

●

An increase in cash and cash equivalents of $464,799

	●	An increase in other receivable of $64,777

	●	An increase in due from related parties of $96,855

	●	A decrease in VAT payable of $90,327

Offset by:

●

An increase in other payable of $146,709

●

An increase in advance from customers of $135,656

Because the exchange rate conversion is different for the balance sheets and the statements of cash flows, the changes in assets and liabilities reflected on the statements of cash flows are not necessarily identical with the comparable changes reflected on the balance sheets.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.

Quantitative and Qualitative Disclosures About Market Risk

Foreign Exchange Risk

While our reporting currency is the US dollar, all of our revenues and costs and expenses are denominated in RMB. All of our assets are denominated in RMB except for some cash and cash equivalents and accounts receivables. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between US dollar and RMB. If the RMB depreciates against the US dollar, the value of our RMB revenues, earnings and assets as expressed in our US dollar financial statements will decline. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.

Inflation

Inflationary factors such as increases in the costs of our products and overhead costs may adversely affect our operating results. Inflation in China has recently increased substantially. The inflation rate in China was reported at approximately 2.2% for 2018 and 2.0% for 2017 (see http://www.statista.com/statistics/270338/inflation-rate-in-china/).

These factors have led to the adoption by the Chinese government, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. Price inflation can affect our ability to maintain current levels of gross margin and selling and distribution, general and administrative expenses as a percentage of net revenues if we are unable to pass along raw material price increases to customers. Accordingly, inflation in China may weaken our competitiveness domestically or in international markets.

Off-Balance Sheet Arrangements

As of March 31, 2018, we have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company and therefore, we are not required to provide information required by this Item of Form 10-Q.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures.

We carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2018. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. Based on the evaluation described above, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report because we did not document our Sarbanes-Oxley Act Section 404 internal controls and procedures.

As funds become available to us, we expect to implement additional measures to improve disclosure controls and procedures such as implementing and documenting our internal controls procedures.

Changes in internal controls over financial reporting

There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The Company’s management, including its Principal Executive Officer and its Principal Financial Officer, do not expect that the Company’s disclosure controls will prevent or detect all errors and all fraud. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under 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 to our operations.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit No.		Exhibit Description

31.1		Certification of the Chief Executive Officer required under Rule 13a-14(a)/15d-14(a) of the Exchange Act

31.2		Certification of the Chief Financial Officer required under Rule 13a-14(a)/15d-14(a) of the Exchange Act

32.1		Certification of the Chief Executive Officer required under Section 1350 of the Exchange Act

32.2		Certification of the Chief Financial Officer required under Section 1350 of the Exchange Act

101 INS		XBRL Instance Document

101 SCH		XBRL Taxonomy Schema

101 CAL		XBRL Taxonomy Extension Calculation Linkbase

101 DEF		XBRL Taxonomy Extension Definition Linkbase

101 LAB		XBRL Taxonomy Extension Label Linkbase

101 PRE		XBRL Taxonomy Extension Presentation Linkbase

SIGNATURES

Pursuant to the requirements 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.

	JIUCAITONG GROUP LIMITED

Date: May 15, 2018	By:	/s/ Xuefei Kang
		Xuefei Kang
		Chief Executive Officer

Jiucaitong Group Ltd 10-Q