Item 1. Interim Financial Statements.
PONY GROUP INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | |
June 30,
2022 | | |
December 31,
2021 | |
| | |
Unaudited | | |
| |
| Assets | |
| | |
| |
| Current assets | |
| | |
| |
| Cash and cash equivalents | |
$ | 44,800 | | |
$ | 266,011 | |
| Accounts receivables | |
| 29,107 | | |
| 47,838 | |
| Other receivables | |
| 502 | | |
| 301 | |
| Other receivables-related parties | |
| 8,998 | | |
| 8,998 | |
| Total current assets | |
| 83,407 | | |
| 323,148 | |
| | |
| | | |
| | |
| Total assets | |
$ | 83,407 | | |
$ | 323,148 | |
| | |
| | | |
| | |
| Liabilities and Equity | |
| | | |
| | |
| | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Accounts payable | |
$ | 31,291 | | |
$ | 37,052 | |
| Other payable- related parties | |
| 356,450 | | |
| 286,150 | |
| Other current liability | |
| 23,237 | | |
| 102,930 | |
| Total current liabilities | |
| 410,978 | | |
| 426,132 | |
| Total liabilities | |
$ | 410,978 | | |
$ | 426,132 | |
| | |
| | | |
| | |
| Equity | |
| | | |
| | |
| Ordinary shares, $0.001 par value, 70,000,000 shares authorized, 11,500,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | |
| 11,500 | | |
| 11,500 | |
| Additional paid-in capital | |
| 176,000 | | |
| 176,000 | |
| Accumulated foreign currency exchange loss | |
| (897 | ) | |
| (10,158 | ) |
| Accumulated deficit | |
| (514,174 | ) | |
| (280,326 | ) |
| Total Pony Group Inc stockholders’ equity | |
| (327,571 | ) | |
| (102,984 | ) |
| Total equity | |
| (327,571 | ) | |
| (102,984 | ) |
| Total liabilities and equity | |
$ | 83,407 | | |
$ | 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
June 30, | | |
For The Six Months Ended
June 30, | |
| | |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
$ | 23,696 | | |
$ | 40,005 | | |
$ | 53,564 | | |
$ | 52,273 | |
| | |
| | | |
| | | |
| | | |
| | |
| Cost of revenue | |
| 6,769 | | |
| 20,800 | | |
| 31,593 | | |
| 52,250 | |
| | |
| | | |
| | | |
| | | |
| | |
| Gross profit | |
| 16,927 | | |
| 19,205 | | |
| 21,971 | | |
| 23 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating expenses | |
| | | |
| | | |
| | | |
| | |
| General & administrative expenses | |
| 123,775 | | |
| 55,645 | | |
| 238,123 | | |
| 78,805 | |
| R&D expense | |
| 10,187 | | |
| - | | |
| 17,257 | | |
| - | |
| Total operating expenses | |
| 133,962 | | |
| 55,645 | | |
| 255,380 | | |
| 78,805 | |
| | |
| | | |
| | | |
| | | |
| | |
| Income (loss) from operation | |
| (117,035 | ) | |
| (36,440 | ) | |
| (233,409 | ) | |
| (78,782 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other income (expenses) | |
| | | |
| | | |
| | | |
| | |
| Other income (expense) | |
| (473 | ) | |
| 20,005 | | |
| (439 | ) | |
| 19,906 | |
| Total other income | |
| (473 | ) | |
| 20,005 | | |
| (439 | ) | |
| 19,906 | |
| | |
| | | |
| | | |
| | | |
| | |
| Income (Loss) before income taxes | |
| (117,508 | ) | |
| (16,435 | ) | |
| (233,848 | ) | |
| (58,876 | ) |
| Provision for income tax | |
| | | |
| - | | |
| | | |
| - | |
| Net Income (Loss) | |
$ | (117,508 | ) | |
$ | (16,435 | ) | |
$ | (233,848 | ) | |
$ | (58,876 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other Comprehensive Income | |
| | | |
| - | | |
| | | |
| - | |
| Comprehensive income (loss) | |
| (117,508 | ) | |
| (16,435 | ) | |
| (233,848 | ) | |
| (58,876 | ) |
| Basic and diluted earnings (loss) per common share* | |
| (0.010 | ) | |
| (0.001 | ) | |
| (0.020 | ) | |
| (0.005 | ) |
| 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 | |
| - | | |
| - | | |
| - | | |
| - | | |
| (2,855 | ) | |
| - | | |
| (2,855 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net (Loss) | |
| | | |
| - | | |
| - | | |
$ | - | | |
| - | | |
| (58,876 | ) | |
| (58,876 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| - | |
Balance as of
June 30, 2021 | |
| 11,500,000 | | |
$ | 11,500 | | |
$ | 176,000 | | |
$ | - | | |
$ | (9,178 | ) | |
$ | (241,196 | ) | |
$ | (62,874 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of December 31, 2021 | |
| 11,500,000 | | |
$ | 11,500 | | |
$ | 176,000 | | |
$ | - | | |
$ | (10,158 | ) | |
$ | (280,326 | ) | |
$ | (102,984 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cumulative Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| 9,261 | | |
| - | | |
| 9,261 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net (Loss) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (233,848 | ) | |
| (233,848 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of June 30, 2022 | |
| 11,500,000 | | |
$ | 11,500 | | |
$ | 176,000 | | |
$ | - | | |
$ | (897 | ) | |
$ | (514,174 | ) | |
$ | (327,571 | ) |
| * | 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 Six Months Ended
June 30, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Operating activities | |
| | |
| |
| Net Loss | |
$ | (233,848 | ) | |
$ | (58,876 | ) |
| | |
| | | |
| | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| 18,731 | | |
| 27,325 | |
| Other receivable | |
| (201 | ) | |
| (1 | ) |
| Accounts payable | |
| (5,761 | ) | |
| 6,867 | |
| Other payable | |
| (79,693 | ) | |
| 51,028 | |
| Cash provided (used) in operating activities | |
| (300,772 | ) | |
| 26,343 | |
| | |
| | | |
| | |
| 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 | |
| 70,300 | | |
| (35,400 | ) |
| Cash provided by financing activities | |
| 70,300 | | |
| (35,400 | ) |
| | |
| | | |
| | |
| Effects of currency translation on cash | |
| 9,261 | | |
| (2,855 | ) |
| | |
| | | |
| | |
| Net increase (decrease) in cash | |
| (221,211 | ) | |
| (11,912 | ) |
| Cash at beginning of the period | |
| 266,011 | | |
| 286,957 | |
| Cash at end of period | |
$ | 44,800 | | |
$ | 275,045 | |
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 MARCH 31, 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 June 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 June 30, 2022 and December 31, 2021, accounts
receivable was $29,107 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 account for 100% of the revenue for the six month ended June 30, 2022 and 2021, 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:
| June 30, 2022 | |
| |
|
| Balance sheet | |
HK$7.83 to US $1.00 | |
RMB 6.69 to US $1.00 |
| Statement of operation and other comprehensive income | |
HK$7.85 to US $1.00 | |
RMB 6.61 to US$1.00 |
| December 31, 2021 | |
| |
|
| Balance sheet | |
HK$7.80 to US $1.00 | |
RMB 6.37 to US $1.00 |
| June 30, 2021 | |
| |
|
| Statement of operation and other comprehensive income | |
HK$7.77 to US $1.00 | |
RMB 6.46 to US$1.00 |
NOTE 2 - GOING CONCERN
The Company had operating losses of $233,848 and $58,876 during the
six months ended June 30, 2022 and 2021, respectively.
The Company has accumulated deficit of $514,174
and $280,326 as of June 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 June 30, 2022, Pony HK has paid $266,879 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.
| | |
June 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:
| | |
June 30, 2022 | | |
December 31,
2021 | |
| To Wenxian Fan | |
$ | 356,450 | | |
$ | 286,150 | |
| Total due to related parties | |
$ | 356,450 | | |
$ | 286,150 | |
NOTE 4 - MAJOR SUPPLIERS
AND CUSTOMERS
The Company purchased majority of its subcontracted services from one
major supplier during the six months ended June 30, 2022: Changying Business Limited for
96.34% of the cost.
The Company had two major customers for the six months ended June 30,
2022: HK Gangjianxiang Trade Co Ltd. (“Gangjianxiang”) for 69.83% of the revenue and Shenzhen Shangjia Electronic Technology.,
Ltd (“Shangjia”) for 27.43% 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 August 14, 2022, the date which the financial statements were available to be issued. All subsequent events requiring recognition
as of June 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 June 30, 2022
compared to June 30, 2021
Revenue
For the three months ended June, 2022 and 2021,
revenues were $23,696 and $40,005, respectively, with a decrease of $16,309 over the same period in 2021. Due to the effect of COVID-19,
the number of travellers between Guangdong province and Hong Kong decease significantly. Thus, the orders of our travel service business
decreased.
For the six months ended June 30, 2022 and 2021,
revenues were $53,564 and $52,273 respectively, with an increase of $1,291 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 June 30, 2022 and 2021 were
$6,769 and $20,800, respectively, with a decrease of $12,436 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 six months ended June 30, 2022 and 2021 were
$31,593 and $52,250, respectively, with a decrease of $20,657 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 six
months ended June 30, 2022.
Gross Profit
Gross profits were $16,927 and $19,205 for the three months ended June
30, 2022 and 2021. The gross profit margin as a percentage of sales were 71.43% and 48.01% for the three months ended June 30, 2022 and
2021, respectively. The increase of gross profit margin was due to Universe Travel providing technology development services to Shangjia
in June 2022, which brought in $14,692 in revenue for the Company. The total contract amount of the technology development services was
RMB100,000 (about USD15,129). 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 June 30, 2022.
Gross profits were $21,971 and $23 for the six months ended June 30,
2022 and 2021, respectively. The gross profit margin as a percentage of sales for the six months ending June 30, 2022 and 2021 were 41.02%
and 0.04%, respectively.
Operating Expenses
Operating expenses for the three months ended June 30, 2022 and 2021
were $133,962 and $55,645 respectively for an increase of $78,317. The increase was mainly due to service fee paid for OTC listing and
other consulting services fees. R&D expenses increased to $10,187 for the Company to develop and maintain the App.
Operating expenses for
the six months ended June 30, 2022 and 2021 were $255,380 and $78,805, respectively, an increase of $176,575 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 $17,257
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 June 30, 2022 and 2021, the Net Other Expense was $473 when it was a net income of $20,005 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 six months ended June 30, 2022 and 2021, the net other expense
was $439 when it was a net other income of $19,906 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 $514,174 as of June 30, 2022. We had a cash balance of $44,800 and working capital of negative $327,571
as of June 30, 2022. The Company has incurred losses of $117,508 and $16,435 for the three months ended June 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 June 30, 2022, we have enough cash to continue operations for approximately six months.
Net cash used in operating activities for the
six months ended June 30, 2022, amounted to $300,722, compared to $26,342 net cash used in operating activities for the six months ended
June 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 six months
ended June 30, 2022 and 2021.
Net cash provided by financing activities for the six months ended
June 30, 2022 amounted to $70,300, compared to net cash used in financing activities of $35,400 in the same period 2021. The net cash
provided by financing activities were from shareholders which 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 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. As of the date of this report, the Hong Kong government is enforcing a compulsory 7-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 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 RMB 60,000 (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 June 30, 2022, we did not have any off-balance sheet arrangements
as defined in Item 303(a)(4)(ii) of Regulation S-K.