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 | |
$ | 48,187 | | |
$ | 266,011 | |
| Accounts receivables | |
| 2,275 | | |
| 47,838 | |
| Other receivables | |
| 276 | | |
| 301 | |
| Other receivables-related parties | |
| 8,998 | | |
| 8,998 | |
| Total current assets | |
| 59,736 | | |
| 323,148 | |
| | |
| | | |
| | |
| Total assets | |
$ | 59,736 | | |
$ | 323,148 | |
| | |
| | | |
| | |
| Liabilities and Equity | |
| | | |
| | |
| | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Accounts payable | |
$ | 31,087 | | |
$ | 37,052 | |
| Other payable- related parties | |
| 377,663 | | |
| 286,150 | |
| Other current liability | |
| 7,011 | | |
| 102,930 | |
| Total current liabilities | |
| 415,761 | | |
| 426,132 | |
| Total liabilities | |
$ | 415,761 | | |
$ | 426,132 | |
| | |
| | | |
| | |
| Equity | |
| | | |
| | |
| Ordinary shares, $0.001 par value, 70,000,000 shares authorized, 11,500,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | |
| 11,500 | | |
| 11,500 | |
| Additional paid-in capital | |
| 176,000 | | |
| 176,000 | |
| Accumulated foreign currency exchange loss | |
| 14,340 | | |
| (10,158 | ) |
| Accumulated deficit | |
| (557,865 | ) | |
| (280,326 | ) |
| Total Pony Group Inc stockholders’ equity | |
| (356,025 | ) | |
| (102,984 | ) |
| Total equity | |
| (356,025 | ) | |
| (102,984 | ) |
| Total liabilities and equity | |
$ | 59,736 | | |
$ | 323,148 | |
The
accompanying notes are integral to these consolidated financial statements.
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 | |
$ | 22,847 | | |
$ | 30,145 | | |
$ | 76,411 | | |
$ | 82,418 | |
| | |
| | | |
| | | |
| | | |
| | |
| Cost of revenue | |
| 6,523 | | |
| 24,796 | | |
| 38,116 | | |
| 77,046 | |
| | |
| | | |
| | | |
| | | |
| | |
| Gross profit | |
| 16,324 | | |
| 5,349 | | |
| 38,295 | | |
| 5,372 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating expenses | |
| | | |
| | | |
| | | |
| | |
| General & administrative expenses | |
| 46,306 | | |
| 38,638 | | |
| 284,429 | | |
| 117,443 | |
| R&D expense | |
| 6,559 | | |
| - | | |
| 23,816 | | |
| - | |
| Total operating expenses | |
| 52,865 | | |
| 38,638 | | |
| 308,245 | | |
| 117,443 | |
| | |
| | | |
| | | |
| | | |
| | |
| Income (loss) from operation | |
| (36,541 | ) | |
| (33,289 | ) | |
| (269,950 | ) | |
| (112,071 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other income (expenses) | |
| | | |
| | | |
| | | |
| | |
| Other income (expense) | |
| (7,150 | ) | |
| (1,656 | ) | |
| (7,589 | ) | |
| 18,250 | |
| Total other income | |
| (7,150 | ) | |
| (1,656 | ) | |
| (7,589 | ) | |
| 18,250 | |
| | |
| | | |
| | | |
| | | |
| | |
| Income (Loss) before income taxes | |
| (43,691 | ) | |
| (34,945 | ) | |
| (277,539 | ) | |
| (93,821 | ) |
| Provision for income tax | |
| | | |
| - | | |
| | | |
| - | |
| Net Income (Loss) | |
$ | (43,691 | ) | |
$ | (34,945 | ) | |
$ | (277,539 | ) | |
$ | (93,821 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other Comprehensive Income | |
| | | |
| - | | |
| | | |
| - | |
| Comprehensive income (loss) | |
| (43,691 | ) | |
| (34,945 | ) | |
| (277,539 | ) | |
| (93,821 | ) |
Basic and diluted earnings (loss) per common share* | |
| (0.004 | ) | |
$ | (0.001 | ) | |
| (0.024 | ) | |
| (0.020 | ) |
| Weighted average number of shares outstanding* | |
| 11,500,000 | | |
| 11,500,000 | | |
| 11,500,000 | | |
| 11,500,000 | |
The
accompanying notes are integral to these consolidated financial statements.
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 | |
| 11,500,000 | | |
$ | 11,500 | | |
$ | 176,000 | | |
$ | - | | |
$ | (6,323 | ) | |
$ | (182,320 | ) | |
$ | (1,143 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cumulative Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| (2,997 | ) | |
| - | | |
| (2,997 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net (Loss) | |
| | | |
| - | | |
| - | | |
$ | - | | |
| - | | |
| (93,821 | ) | |
| (93,821 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| - | |
| Balance as of September 30, 2021 | |
| 11,500,000 | | |
$ | 11,500 | | |
$ | 176,000 | | |
$ | - | | |
$ | (9,320 | ) | |
$ | (276,141 | ) | |
$ | (97,961 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of December 31, 2021 | |
| 11,500,000 | | |
$ | 11,500 | | |
$ | 176,000 | | |
$ | - | | |
$ | (10,158 | ) | |
$ | (280,326 | ) | |
$ | (102,984 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cumulative Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| 24,498 | | |
| - | | |
| 24,498 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net (Loss) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (277,539 | ) | |
| (277,539 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of September 30, 2022 | |
| 11,500,000 | | |
$ | 11,500 | | |
$ | 176,000 | | |
$ | - | | |
$ | 14,340 | | |
$ | (557,865 | ) | |
$ | (356,025 | ) |
| * |
The
shares are presented on a retroactive basis to reflect the nominal share issuance. |
The
accompanying notes are integral to these consolidated financial statements.
PONY
GROUP INC., AND SUBSIDIARIES
CONSOLIDATED
STATEMETNS OF CASH FLOWS
| | |
For The Nine Months Ended
September 30, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Operating activities | |
| | |
| |
| Net Loss | |
$ | (277,539 | ) | |
$ | (93,821 | ) |
| | |
| | | |
| | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| 45,563 | | |
| 19,233 | |
| Other receivable | |
| 25 | | |
| (164 | ) |
| Accounts payable | |
| (5,965 | ) | |
| 11,779 | |
| Other payable | |
| (95,919 | ) | |
| 52,332 | |
| Cash provided (used) in operating activities | |
| (333,835 | ) | |
| (10,641 | ) |
| | |
| | | |
| | |
| 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 | |
| 91,513 | | |
| (10,677 | ) |
| Cash provided by financing activities | |
| 91,513 | | |
| (10,677 | ) |
| | |
| | | |
| | |
| Effects of currency translation on cash | |
| 24,498 | | |
| (2,997 | ) |
| | |
| | | |
| | |
| Net increase (decrease) in cash | |
| (217,824 | ) | |
| (24,315 | ) |
| Cash at beginning of the period | |
| 266,011 | | |
| 286,957 | |
| Cash at end of period | |
$ | 48,187 | | |
$ | 262,642 | |
The
accompanying notes are integral to these consolidated financial statements.
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, 10,000 shares of the PONY LIMOUSINE SERVICES LIMITED, which represented
100% of the shares. On March 7, 2019, this transaction was completed.
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.
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 $2,275 and $47,838, respectively. The company considers accounts
receivable to be fully collectible and determined that an allowance for doubtful accounts was not necessary.
PONY
LIMOUSINE SERVICES LIMITED, a 100% subsidiary of the Company, has agreements with its two major clients that the payments for the services
rendered be settled every six months. The two major clients combined accounted for 97.86% of the revenue for the nine months ended September
30, 2022, respectively.
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 16.5% on the estimated assessable profit
for the period.
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$7.85 to US $1.00 |
|
RMB 7.11 to US $1.00 |
| Statement
of operation and other comprehensive income |
|
HK$7.85 to US $1.00 |
|
RMB 6.85 to US$1.00 |
| December
31, 2021 |
|
|
|
|
| Balance
sheet |
|
HK$7.80 to US $1.00 |
|
RMB 6.37 to US $1.00 |
| September
30, 2021 |
|
|
|
|
| Statement
of operation and other comprehensive income |
|
HK$7.78 to US $1.00 |
|
RMB 6.47 to US$1.00 |
NOTE
2 - GOING CONCERN
The
Company had operating losses of $277,539 and $93,821 during the nine months ended September 30, 2022 and 2021, respectively.
The
Company has accumulated deficit of $577,865 and $280,326 as of September 30, 2022 and December 31, 2021, respectively. The Company’s
continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations
and/or obtain additional financing, as may be required.
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 $272,407 on behalf of PONY GROUP INC for the US legal and audit cost incurred relevant to
the OTC listing.
Amount
of receivable from shareholders due to the company declared a 6,000 to 1 stock split. After the stock split, the par value of the commons
stocks was $0.001 per share. The shareholders should pay the consideration of $8,998 to the company. For the company use a retroactive
basis to present the nominal shares, the considerations and receivable form shareholders also should be represented.
| | |
September 30,
2022 | | |
December 31,
2021 | |
| Receivable from shareholders | |
$ | 8,998 | | |
$ | 8,998 | |
| Total due from related parties | |
$ | 8,998 | | |
$ | 8,998 | |
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.
The
Company has the following payables to Ms. Wenxian Fan:
| | |
September 30,
2022 | | |
December 31,
2021 | |
| To Wenxian Fan | |
$ | 377,663 | | |
$ | 286,150 | |
| Total due to related parties | |
$ | 377,663 | | |
$ | 286,150 | |
NOTE
4 - MAJOR SUPPLIERS AND CUSTOMERS
The
Company purchased majority of its subcontracted services from one major supplier during the nine months ended September 30, 2022: Changying
Business Limited for 76.49% of the cost.
The
Company had two major customers for the nine months ended June 30, 2022: HK Gangjianxiang Trade Co Ltd. (“Gangjianxiang”)
for 60.11% of the revenue and Shenzhen Shangjia Electronic Technology., Ltd (“Shangjia”) for 37.75% of revenue.
NOTE
5 - COMMON STOCK
On
May 23, 2019, PONY GROUP INC sold 1,500 shares of common stock to the following shareholders. On May 24, 2019, these transactions were
completed, the consideration received were deposited into the company’s bank account. On June 1, 2020, the company declared a 6,000
to 1 stock split. After the stock split, the par value of the commons stocks was $0.001 per share. The shareholders and the number of
shares held after the stock dividend are as following:
| Name | |
Shares | | |
Consideration | |
| Pony Group Ltd. | |
| 5,580,000 | | |
| 5,580 | |
| Aller Bonvoyage Inc | |
| 360,000 | | |
| 360 | |
| Capital Club Holding Limited | |
| 360,000 | | |
| 360 | |
| KERUIDA Investment Limited | |
| 900,000 | | |
| 900 | |
| Synionm Investments Limited | |
| 900,000 | | |
| 900 | |
| Wisdom travel service investments Limited | |
| 900,000 | | |
| 900 | |
In
June 2020, the Company announced the closing of its initial public offering of 2,500,000 ordinary shares at a public offering price of
$0.1 per share, for total gross proceeds of approximately $250,000 before deducting underwriting discounts, commissions and other related
expenses.
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.”
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.
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.
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.
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.