PONY GROUP INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)


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.


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
. 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 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 second version which has an enhanced interface in both Chinese and
English language, supporting 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 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 March 31, 2022 compared to March 31, 2021


For the three months ended March 31, 2022 and 2021, revenues were $29,868 and
$12,268, respectively, with an increase of $17,600 over the same period in 2021.
Since January 2022, the company provided car service for HK GANGJIANXIANG TRADE
CO LTD. which brings in about RMB 60,000 (about $9,464) revenue per month. The
increase in revenue can be explained by the providing services to the foregoing
new client.

Cost of Revenue

Cost of Revenue for the three months ended March 31, 2022 and 2021 were $24,824
and $31,450, respectively, with a decrease of $6,626 over the same period in
2021. The decrease of cost of revenue was mainly due to Universe Travel. In the
first quarter of 2021, Universe Travel was developing an active travel planning
service. As such, the cost of developing the service increased the cost of
revenue for that quarter. There was no such item since 2022, thus the cost of
revenue decreased.

Gross Profit

Gross profits was $5,044 for the three months ended March 31, 2022 when it was a
negative $19,182 for the three months ended March 31, 2021. The gross profit
margin as a percentage of sales for the three months ended March 31, 2022 was
16.9% when it was negative 156.4% for the three months ended March 31, 2021.

Operating Expenses

Operating expenses for the three months ended September 30, 2021 and 2020 were
$38,638 and $37,588 respectively for an increase of $1,050.


Other Income(expense)

Other income consists of interest income and exchange gain (loss) for the three
months ended March 31, 2022 and 2021, the net other income was $34 for the three
months ended March 31, 2022 when it was other expense of $99 for the same period
last year. The increase was mainly due to the change of exchange rate and the
increase of average cash balance.

Liquidity and Capital Resources

We suffered recurring losses from operations and have an accumulated deficit of
$396,666 as of March 31, 2022. We had a cash balance of $146,460 and working
capital of negative $219,766 as of March 31, 2022. The Company has incurred
losses of $116,340 and $42,411 for the three months ended March 31, 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 March 31, 2022, we have enough cash to continue operations for
approximately six months.

Net cash used in operating activities for the three months ended March 31, 2022,
amounted to $116,194, compared to $33,495 net cash used in operating activities
for the three months ended March 31, 2021. The increase of net cash used in
operating activities mainly due to the increase of net loss.

There were $0 cash used by investment activities for the three months ended
March 31, 2022 and 2021.

Net cash used in financing activities for the three months ended March 31, 2022
amounted to $2,915, compared to net cash provided by financing activities of
$13,094 in the same period 2021.



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,
to February 10, 2020. At the end of this period, management reopened our

As of the date of this prospectus, 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. On
February 8, 2020, the Hong Kong government began enforcing a compulsory 21-day
quarantine for anyone, with reduced quarantine period for vaccinated persons
arriving in Hong Kong from overseas depending on their port of embarkation.
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
authorities determine the traveller to be a health risk. On January 30,
, the Hong Kong government closed certain transportation links and border
checkpoints connecting Hong Kong with mainland China (all located in Guangdong
) until further notice, and on February 3, 2020 suspended ferry services
from Macau (which has border checkpoints connecting Macau with Guangdong

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 during
the first quarter of 2020. For example, compared to the first quarter of 2019,
the first quarter of 2020’s revenue, cost of revenue and operating expenses
decreased by 33.2%, 43.8% and 76.6%, respectively, and gross profit and other
income increased by 19.9% and 240.8%, respectively. We believe the decreases,
including the decrease in cost of revenue, are primarily attributable to the
fact that we ceased car services for individual and group travellers between
Guangdong Province and Hong Kong in the first quarter of 2020, resulting in a
decrease of customers. In the same period, we started to provide express,
small-package delivery services for customers in the same region in cities
including Shenzhen, Guangzhou, Zhuhai and Zhongshan, which brought in an
estimated $8,700 of revenue. We expect that after our offices reopened on
February 11, 2020 and as the travel restrictions started to ease, our business
will gradually return to normal levels, although we are unable to predict as of
the date of this prospectus the speed of the recovery.

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 March 31, 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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