Pony Group Inc 10-Q for FY2022 Q3
Pony Group Inc. (PNYG)
About this 10-Q
Pony Group Inc filed this 10-Q on November 14, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).
Headline figures
Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $22.85K
- down 24.2% from $30.15K a year earlier
- Net loss
- $43.69K
- compared with a net loss of $34.95K a year earlier
- Diluted EPS
- -$0.00
- compared with -$0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
For
the quarter ended
For the transition period from to
Commission file number: [ ]
| (Exact Name of Registrant as Specified in Its Charter) |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
7 Gaoxin South Avenue
People’s
Republic of
(Address of principal executive offices)
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
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 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 | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As
of November 11, 2022, there were
PONY GROUP INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
PONY GROUP INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| September 30, 2022 | December 31, 2021 | |||||||
| Unaudited | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivables | ||||||||
| Other receivables | ||||||||
| Other receivables-related parties | ||||||||
| Total current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Other payable- related parties | ||||||||
| Other current liability | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Equity | ||||||||
| Ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated foreign currency exchange loss | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Pony Group Inc stockholders’ equity | ( | ) | ( | ) | ||||
| Total equity | ( | ) | ( | ) | ||||
| Total liabilities and equity | $ | $ | ||||||
The accompanying notes are integral to these consolidated financial statements.
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PONY GROUP INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| For The Three Months Ended September 30, | For The Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| General & administrative expenses | ||||||||||||||||
| R&D expense | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Income (loss) from operation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income | ( | ) | ( | ) | ( | ) | ||||||||||
| Income (Loss) before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income tax | ||||||||||||||||
| Net Income (Loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other Comprehensive Income | ||||||||||||||||
| Comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| ( | ) | $ | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average number of shares outstanding* | ||||||||||||||||
The accompanying notes are integral to these consolidated financial statements.
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PONY GROUP INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGE IN EQUITY
| Common stock | Additional Paid-In | Subscription received in | Accumulated Other Comprehensive Income | Accumulated Earnings | ||||||||||||||||||||||||
| Shares* | Amount | Capital | advance | (Loss) | (Deficit) | Total | ||||||||||||||||||||||
| Balance as of December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| Cumulative Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Net (Loss) | $ | ( | ) | ( | ) | |||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||
| Balance as of September 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| Cumulative Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
| Net (Loss) | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance as of September 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| * | The shares are presented on a retroactive basis to reflect the nominal share issuance. |
The accompanying notes are integral to these consolidated financial statements.
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PONY GROUP INC., AND SUBSIDIARIES
CONSOLIDATED STATEMETNS OF CASH FLOWS
| For The Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Operating activities | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Other receivable | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Other payable | ( | ) | ||||||
| Cash provided (used) in operating activities | ( | ) | ( | ) | ||||
| Cash flow used in investing activities: | ||||||||
| Cash used in investing activities | ||||||||
| Cash flow provided (used) by financing activities: | ||||||||
| Pay for deferred offering cost | ||||||||
| Advance from (repayment to) related party | ( | ) | ||||||
| Cash provided by financing activities | ( | ) | ||||||
| Effects of currency translation on cash | ( | ) | ||||||
| Net increase (decrease) in cash | ( | ) | ( | ) | ||||
| Cash at beginning of the period | ||||||||
| Cash at end of period | $ | $ | ||||||
The accompanying notes are integral to these consolidated financial statements.
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PONY GROUP INC., AND SUBSIDIARIES
NOTES FOR THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2022
NOTE 1 - ORGANIZATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Operations
PONY GROUP INC, (The “Company” or “PONY”) was incorporated on January 7, 2019 in the state of Delaware.
On
March 7, 2019, Pony Group Inc (the “Purchaser”), and Wenxian Fan, the sole owner of PONY LIMOUSINE SERVICES LIMITED, entered
into a Stock Purchase Agreement (the “Purchase Agreement”), pursuant to which Wenxian Fan (the “Seller”) would
sell to the Purchaser, and the Purchaser will purchase from the Seller,
PONY LIMOUSINE SERVICES LIMITED (“PONYHK”) is a limited corporation formed under the laws of Hong Kong on April 28, 2016, which was formed by FAN WENXIAN. Its registered office is located at FLAT/RM 01 11/F, LUCKY COMM BLDG, 103 DES VOEUX RD WEST, SHEUNG WAN, HONG KONG. The business nature of the Company is to provide cross boarder limousine services to customers. On February 2, 2019, Universe Travel Culture & Technology Ltd. (“Universe Travel”) was incorporated as a wholly-owned PRC subsidiary of Pony HK.
Details of the Company’s structure as of September 30, 2022 are as follow:
Reverse Merger Accounting – Since Pony HK and Pony US were entities under Ms. Fan’s common control prior to the “Purchase Agreement” was executed, and because of certain other factors, including that the member of the Company’s executive management is from Pony HK, Pony HK is deemed to be the acquiring company for accounting purposes and the Merger was accounted for as a reverse merger and a recapitalization in accordance with generally accepted accounting principles in the United States (“GAAP”). These unaudited consolidated financial statements reflect the historical results of Pony HK prior to the Merger and that of the combined Company following the Merger, and do not include the historical financial results prior to the completion of the Merger. Common stock and the corresponding capital amounts of the Company pre-Merger have been retroactively restated as capital stock shares.
Basis of Accounting and Presentation - The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
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Cash and Cash Equivalents – For purpose of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of 90 days or less to be cash equivalents.
Accounts Receivable - The customers are required to make payments when they book the services, otherwise, the services will not be arranged. Sometimes, the Company extends credit to its group clients.
As
of September 30, 2022 and December 31, 2021, accounts receivable was $
PONY
LIMOUSINE SERVICES LIMITED, a
Revenue Recognition - The Company recognizes revenue in accordance with ASC 606. The core principle of ASC606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASC 606 defines a five-step process to achieve this core principle, which includes: (1) identifying contracts with customers, (2) identifying performance obligations within those contracts, (3) determining the transaction price, (4) allocating the transaction price to the performance obligation in the contract, which may include an estimate of variable consideration, and (5) recognizing revenue when or as each performance obligation is satisfied. Our sales arrangements generally ask customers to pay in advance before any services can be arranged. The company recognizes revenue when each performance obligation is satisfied. Documents and terms and the completion of any customer acceptance requirements, when applicable, are used to verify services rendered. The Company has no returns or sales discounts and allowances because services rendered and accepted by customers are normally not returnable.
Cost of revenue – Cost of revenue includes cost of services rendered during the period, net of discounts and sales tax.
Income
Taxes – Income tax expense represents current tax expense. The income tax payable represents the amounts expected
to be paid to the taxation authority. Hong Kong profits tax has been provided at the rate of
Foreign Currency Translation - PONY LIMOUSINE SERVICES LIMITED’s functional currency is the Hong Kong Dollar (HK$) and Universe Travel Culture & Technology Ltd.’s functional currency is the Renminbi (RMB). The reporting currency is that of the US Dollar. Assets, liabilities and owners’ contribution are translated at the exchange rates as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the year.
The exchange rates used to translate amounts in HK$ and RMB into USD for the purposes of preparing the financial statements were as follows:
| September 30, 2022 | ||||
| Balance sheet | HK$ |
RMB | ||
| Statement of operation and other comprehensive income | HK$ |
RMB | ||
| December 31, 2021 | ||||
| Balance sheet | HK$ |
RMB | ||
| September 30, 2021 | ||||
| Statement of operation and other comprehensive income | HK$ |
RMB |
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NOTE 2 - GOING CONCERN
The
Company had operating losses of $
The
Company has accumulated deficit of $
The accompanying financial statements have been prepared assuming the Company will continue as a going concern; however, the above condition raises substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
Management’s Plan to Continue as a Going Concern
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for the Company include (1) obtaining capital from the sale of its equity securities, (2) sales of the Company’s products, (3) short-term and long-term borrowings from banks, and (4) short-term borrowings from stockholders or other related party (ies) when needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually to secure other sources of financing and attain profitable operations.
NOTE 3 - RELATED PARTY TRANSACTIONS
PONY
GROUP INC, incorporated on January 7, 2019 in the state of Delaware, is the sole owner of PONY LIMOUSINE SERVICES LIMITED (Pony HK),
as of September 30, 2022, Pony HK has paid $
September 30, | December 31, 2021 | |||||||
| Receivable from shareholders | $ | $ | ||||||
| Total due from related parties | $ | $ | ||||||
Ms. Wenxian Fan, the director, loaned working capital to Pony HK with no interest and paid on behalf of Pony HK for the subcontracted services and employee salaries.
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The Company has the following payables to Ms. Wenxian Fan:
September 30, | December 31, 2021 | |||||||
| To Wenxian Fan | $ | $ | ||||||
| Total due to related parties | $ | $ | ||||||
NOTE 4 - MAJOR SUPPLIERS AND CUSTOMERS
The
Company purchased majority of its subcontracted services from
The
Company had
NOTE 5 - COMMON STOCK
On
May 23, 2019, PONY GROUP INC sold
| Name | Shares | Consideration | ||||||
| Pony Group Ltd. | ||||||||
| Aller Bonvoyage Inc | ||||||||
| Capital Club Holding Limited | ||||||||
| KERUIDA Investment Limited | ||||||||
| Synionm Investments Limited | ||||||||
| Wisdom travel service investments Limited | ||||||||
In
June 2020, the Company announced the closing of its initial public offering of
NOTE 6 - SUBSEQUENT EVENTS
Management has evaluated subsequent events through November14, 2022, the date which the financial statements were available to be issued. All subsequent events requiring recognition as of September 30, 2022 have been incorporated into these financial statements and there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our results of operations and financial condition should be read together with our consolidated financial statements and the notes thereto and other financial information, which are included elsewhere in this Report. Our financial statements have been prepared in accordance with U.S. GAAP. In addition, our financial statements and the financial information included in this Report reflect our organizational transactions and have been prepared as if our current corporate structure had been in place throughout the relevant periods.
Overview
We were incorporated in the State of Delaware on January 7, 2019. We are a travel service provider. We currently provide car services to individual and group travelers. We currently offer carpooling, airport pick-up and drop-off, and personal driver services for travelers between Guangdong Province and Hong Kong. We collaborate with car fleet companies and charge a service fee by matching the traveler and the driver. We officially launched our online service through our “Let’s Go” mobile application in December 2019 to provide multi-language services to international travelers coming to visit China. Redefining the user experience, we aim to provide our users with comprehensive and convenient service offerings and become a one-stop travel booking resource for travelers. While network scale is important, we recognize that transportation happens locally. We currently operate in two markets – Guangdong Province and Hong Kong and plan to expand our offering in more oversea markets.
Plan of Operations
In January 2019, we started our Research and Development (“R&D”) project mobile Lets Go App (“App”) designed to have multi-language interface to attract users from the world, focusing on providing one-stop travel services to foreigners traveling in China, for both leisure and business.
In April 2019, we rolled out basic version which supports carpooling, car rental, airport pick-up and/or drop-off, etc., ready for download at Apple App store; the basic version has an interface in Chinese language only. In May 2019, we rolled out the second version which has an enhanced interface in both Chinese and English language which supports payment through PayPal. By the end of 2019, we rolled out third version which has multi-language interface to attract users from all-over the world. In January 2020, we official launched the App.
We intend to attract users from outside of China to use our App and expand our offerings on the App to serve as a one-stop shop to book tickets, reserve hotels, rent a car and hire an English speaking driver.
Our goal is to grow to an international player in the travel service market. To accomplish such goal, we will cooperate with other businesses which have capital, marketing and technology resources or products. We expect to recruit more workforce and talents, and develop new technologies and products.
Results of Operations
For the three months ended September 30, 2022 compared to September 30, 2021
Revenue
For the three months ended September 30, 2022 and 2021, revenues were $22,847 and $30,145, respectively, with a decrease of $7,298 over the same period in 2021. Due to the effect of COVID-19, the number of travellers between Guangdong province and Hong Kong deceased significantly. Thus, the orders for our travel service business decreased.
For the nine months ended September 30, 2022 and 2021, revenues were $76,411 and $82,418 respectively, with a decrease of $6,007 over the same period in 2021. From January to March 2022, the Company provided car service to Gangjianxiang which brought in approximately RMB 60,000 (about $9,464) of revenue per month. Orders from Gangjianxiang brought in approximately RMB20,000 (about $2,551) from April 2022 due to a decrease in demand for services from Gangjianxiang.
9
Cost of Revenue
Cost of Revenue for the three months ended September 30, 2022 and 2021 were $6,523 and $24,796, respectively, with a decrease of $18,273 over the same period in 2021. The decrease was mainly due to the decrease of orders placed, thus the cost of revenue decreased accordingly.
Cost of Revenue for the nine months ended September 30, 2022 and 2021 were $38,116 and $77,046, respectively, with a decrease of $38,930 over the same period in 2021. The decrease of cost of revenue was mainly due to Universe Travel developing an active travel planning service in the first quarter of 2021. As such, the cost of developing the service increased the cost of revenue for such quarter. There was no such item in 2022, thus the cost of revenue decreased for the nine months ended September 30, 2022.
Gross Profit
Gross profits were $16,324 and $5,349 for the three months ended September 30, 2022 and 2021. The gross profit margin as a percentage of sales were 71.45% and 17.74% for the three months ended September 30, 2022 and 2021, respectively. The increase of gross profit margin was due to Universe Travel providing technology development services to Shangjia in June and August 2022, which brought in $28,847 of revenue for the Company. The total contract amount of the technology development services was RMB200,000 (about USD29,712). This service provided has a higher gross profit margin and led to the increase of the total gross profit margin for the three months ended September 30, 2022.
Gross profits were $38,295 and $5,372 for the nine months ended September 30, 2022 and 2021, respectively. The gross profit margin as a percentage of sales for the nine months ending September 30, 2022 and 2021 were 50.12% and 6.52%, respectively.
Operating Expenses
Operating expenses for the three months ended September 30, 2022 and 2021 were $52,865 and $38,638, respectively for an increase of $14,227. The increase was mainly due to service fee paid for OTC listing and other consulting services fees. R&D expenses increased to $6,559 for the Company to develop and maintain the App.
Operating expenses for the nine months ended September 30, 2022 and 2021 were $308,245 and $117,443, respectively, an increase of $190,802 from the same period in 2021. The increase was mainly due to service fee paid for OTC listing and other consulting services fees. R&D expenses increased to $23,816 for the Company to develop and maintain the App.
Other Income (expense)
Other income consists of interest income and exchange gain (loss) for the three months ended September 30, 2022 and 2021, the net other expense was $7,150 when it was a net expense of $1,656 for the same period last year. This was mainly due to the change of exchange rate and the increase of average cash balances.
For the nine months ended September 30, 2022 and 2021, the net other expense was $7,589 when it was a net other income of $18,250 in the same period last year. This was mainly due to the change of exchange rate and the increase of average cash balances.
Liquidity and Capital Resources
We suffered recurring losses from operations and have an accumulated deficit of $557,865 as of September 30, 2022. We had a cash balance of $48,187 and working capital of negative $356,025 as of September 30, 2022. The Company has incurred losses of $43,691 and $34,945 for the three months ended September 30, 2022 and 2021, respectively. The Company has not continually generated significant gross margins. Unless our operations generate a significant increase in gross margins and cash flows from operating activities, our continued operations will depend on whether we are able to raise additional funds through various sources, such as equity and debt financing, other collaborative agreements and/or strategic alliances. Our management is actively engaged in seeking additional capital to fund our operations in the short to medium term. Such additional funds may not become available on acceptable terms and there can be no assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term. As of September 30, 2022, we have enough cash to continue operations for approximately six months.
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Net cash used in operating activities for the nine months ended September 30, 2022, amounted to $333,835, compared to $10,641 net cash used in operating activities for the nine months ended September 30, 2021. The increase of net cash used in operating activities mainly due to the increase of net loss.
There were $0 cash used in investment activities for the nine months ended September 30, 2022 and 2021.
Net cash provided by financing activities for the nine months ended September 30, 2022 amounted to $91,513, compared to net cash used in financing activities of $10,677 in the same period 2021. The net cash provided by financing activities were from shareholders who paid cost and other expenses on behalf of the Company.
COVID-19
In January 2020, the World Health Organization declared a global health emergency as the novel coronavirus (“COVID-19”) outbreak continues to spread beyond China. In an effort to contain COVID-19, the Chinese authorities have suspended air, road, and rail travel in the area around Wuhan and placed restrictions on travel and other activities throughout China, including Guangdong Province and Hong Kong, the key market in which we operate. In compliance with the government health emergency rules in place, the Company temporarily closed all offices in China and ceased operations from January 19, 2020 to February 10, 2020. At the end of this period, management reopened our business.
As of the date of this Report, the Hong Kong government has reported cases of COVID-19 in the city, has upgraded its response level to emergency, its highest response level, and is taking other steps to manage the outbreak. As of the date of this Report, the Hong Kong government only allows vaccinated persons arriving from overseas to enter, and all vaccinated persons are subject to a three-day self-monitoring period for COVID-19 while in the city. During the self-monitoring period, vaccinated persons are not permitted to enter designated places of public gathering including restaurants, places of amusement and religious premises. Moreover, this mandatory quarantine does not apply to individuals transiting Hong Kong International Airport and certain exempted groups such as flight crews. However, health screening measures are in place at all of Hong Kong’s borders and the Hong Kong authorities will quarantine individual travellers, including passengers transiting the Hong Kong International Airport, if the Hong Kong authorities determine the traveller to be a health risk. On January 30, 2020, the Hong Kong government closed certain transportation links and border checkpoints connecting Hong Kong with mainland China (all located in Guangdong Province) until further notice, and on February 3, 2020 suspended ferry services from Macau (which has border checkpoints connecting Macau with Guangdong Province).
The effects of the COVID-19 pandemic, including the travel restrictions described above, have resulted in a dramatic reduction in the number of people travelling from Guangdong Province to Hong Kong and a similar reduction in the number of our customers and have severely impacted our operating results. The number of travellers between Guangdong province and Hong Kong deceases significantly. Thus, the orders for our travel service business decreased. In the same period, we started provided monthly subscription service to obtain new customers. From January to March 2022, the company provided car service to Gangjianxiang which brought in approximately RMB60,000 (about $9,464) of revenue per month. Orders from Gangjianxiang brought in approximately RMB20,000 (about $2,551) since April 2022. And also “Universe Travel” started to provided technology and development service, we believe that this new business will bring more revenue in the future.
We expect the COVID-19 outbreak may materially affect our financial condition and results of operations going forward. Our business operations and active ties in many regions (including Hong Kong and Guangdong Province) may be subject to quarantines, “shelter-in-place” rules, and various other restrictions for the foreseeable future. Due to the uncertainty of the future impacts of the COVID-19 pandemic, the extent of the financial impact cannot be reasonably estimated at this time. Without limited the generality of the foregoing sentence, any significant disruption to travel, including travel restrictions and other potential protective quarantine measures against COVID-19 by governmental agencies, may increase the difficulty and could make it difficult for the Company to provide its services to its customers. Travel restrictions and protective measures against COVID-19 could cause the Company to incur additional unexpected costs and expenses. The extent to which COVID-19 impacts the Company’s business, sales and results of operations will depend on future developments, which are highly uncertain and cannot be predicted.
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Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern; however, the above condition raises substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for the Company include (1) obtaining capital from the sale of its equity securities, (2) sales of the Company’s services, (3) short-term and long-term borrowings from banks, and (4) short-term borrowings from stockholders or other related party(ies) when needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually to secure other sources of financing and attain profitable operations.
Critical Accounting Policies
The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. We continually evaluate our estimates, including those related to bad debts, the useful life of property and equipment and intangible assets, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our significant judgments and estimates used in the preparation of the financial statements.
Accounts Receivable - The customers are required to make payments when they book the services, otherwise, the services will not be arranged. Sometimes, the Company extends credit to its group clients. The company considers accounts receivable to be fully collectible at year-end. Accordingly, no allowance for doubtful accounts has been recorded.
Revenue Recognition - The Company recognizes revenue in accordance with ASC 606. The core principle of ASC606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASC 606 defines a five-step process to achieve this core principle, which includes: (1) identifying contracts with customers, (2) identifying performance obligations within those contracts, (3) determining the transaction price, (4) allocating the transaction price to the performance obligation in the contract, which may include an estimate of variable consideration, and (5) recognizing revenue when or as each performance obligation is satisfied. Our sales arrangements generally ask customers to pay in advance before any services can be arranged. The company recognizes revenue when each performance obligation is satisfied. Documents and terms and the completion of any customer acceptance requirements, when applicable, are used to verify services rendered. The Company has no returns or sales discounts and allowances because services rendered and accepted by customers are normally not returnable
Off-Balance Sheet Arrangements
As of September 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to make disclosures under this item.
Item 4. Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that as of September 30, our disclosure controls and procedures were effective.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the period ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting
13
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors
There have been no material changes in our risk factors from those disclosed in our Amendment No. 1 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information.
None
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| No. | Description of Exhibit | |
| 31.1* | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1* | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS* | Inline XBRL Instance Document. | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| * | Filed herewith. |
14
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PONY GROUP INC. | ||
| Date: November 11, 2022 | By: | /s/ Wenxian Fan |
| Name: | Wenxian Fan | |
| Title: | Chief
Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) | |
15
Exhibit 31.1
CERTIFICATION
I, Wenxian Fan, Chief Executive Officer of Pony Group Inc., certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Pony Group Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and audit committee: |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
| Date: November 11, 2022 | /s/ Wenxian Fan | |||
| Wenxian Fan | ||||
| Chief Executive Officer (Principal Executive Officer and Chief Financial Officer) (Principal Financial Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Pony Group Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wenxian Fan, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: November 11, 2022 | /s/ Wenxian Fan | |||
| Wenxian Fan | ||||
| Chief Executive Officer (Principal Executive Officer and Chief Financial Officer) (Principal Financial Officer) |