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 travellers. We currently offer carpooling, airport pick-up and drop-off,
and personal driver services for travellers between Guangdong Province and Hong
Kong. We collaborate with car fleet companies and charge a service fee by
matching the traveller 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 travellers 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
travellers. 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 the 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.
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 cars and hire English speaking drivers.
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.
10
Results of Operations
For the three and nine months ended September 30, 2021 Compared to September 30,
2020
Revenue
For the three months ended September 30, 2021 and 2020, revenues were $30,145
and $15,662, respectively, with an increase of $14,483 over the same period in
2020. Due to the effects of COVID-19, the number of travellers between Guangdong
province and Hong Kong deceased significantly during the three months ended
September 30, 2020.
During the nine months ended September 30, 2021, orders for our travel service
business have recovered.
For the nine months ended September 30, 2021 and 2020, revenues were $82,418 and
$38,371 respectively, with an increase of $44,047 over the same period in 2020.
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. During the nine months ended September 30, 2021,
orders for our travel service business have recovered.
Cost of Revenue
Cost of Revenue for the three months ended September 30, 2021 and 2020 were
$24,796 and $2,351, respectively, with an increase of $22,445 over the same
period in 2020. The increase mainly due to increase of service orders during the
quarter thus the cost of revenue increased accordingly.
Cost of Revenue for the nine months ended September 30, 2021 and 2020 were
$77,046 and $12,389, respectively, with an increase of $64,657 over the same
period in 2020. The increase mainly due to increase of service orders during the
quarter thus the cost of revenue increased accordingly.
Gross Profit
Gross profits were $5,349 and $13,311 for the three months ended September 30,
2021 and 2020, respectively, a decrease of $7,962 over the same period in 2020.
The gross profit margin as a percentage of sales for the three months ending
September 30, 2021 and 2020 were 17.74% and 84.99% respectively.
Gross profits were $5,372 and $25,982 for the nine months ended September 30,
2021 and 2020, respectively, a decrease of $20,610 over the same period in 2020.
The gross profit margin as a percentage of sales for the nine months ending
September 30, 2021 and 2020 were 6.52% and 67.71%, respectively.
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.
Operating expenses for the nine months ended September 30, 2021 and 2020 were
$117,443 and $70,355, respectively, an increase of $47,088 from the same period
in 2020. The increase was mainly due to the effect of COVID-19 which the Company
temporarily closed all offices in China and ceased operations from January 19,
2020 to February 10, 2020. There was no such item during the nine months ended
September 30, 2021.
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Other Income (expense)
Other income consists of interest income and exchange gain (loss) for the three
months ended September 30, 2021 and 2020, the net other expense were $1,656 and
$1,521, respectively with an increase of $135. The increase was mainly due to
the change of exchange rate and the increase of average cash balance.
For the nine months ended September 30, 2021 and 2020, the net other income were
$18,250 and $1,440, respectively with an increase of $16,810. The increase was
mainly due to the change of exchange rate and the increase of average cash
balance.
For the three and nine months ended September 30, 2020 compared to September 30,
2019
Revenue
For the three months ended September 30, 2020 and 2019, revenues were $15,662
and $16,175, respectively, with a decrease of $513 over the same period in 2019.
Due to the effect of COVID-19, the number of travelers between Guandong province
and Hong Kong decease a lot. Thus the orders of our travel service business
decrease in the three months ended September 30, 2020. The decrease was offset
by the service revenue of Universe Travel Culture & Technology Ltd. ("Universe
Travel").The company provided active planning and other service for "Shenzhen
Yinxin Enterprise Service Co., Ltd " in August 2020, this part revenue was RMB
87,302 (USD12,624).
For the nine months ended September 30, 2020 and 2019, revenues were $38,371 and
$42,496, respectively, with an decrease of $4,125 over the same period in
2019.The decrease was mainly due to the effect of COVID-19. 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. We expect the COVID-19 outbreak may materially affect our financial
condition and results of operations going forward.
Cost of Revenue
Cost of Revenue for the three months ended September 30, 2020 and 2019 were
$2,351 and $12,778, respectively, with a decrease of $10,427 over the same
period in 2019. The decrease mainly due to the service orders decreases a lot,
thus the cost of revenue decrease accordingly.
Cost of Revenue for the nine months ended September 30, 2020 and 2019 were
$12,389 and $36,353, respectively, with a decrease of $23,964 over the same
period in 2019. The decrease mainly due to the service orders decreases a lot,
thus the cost of revenue decrease accordingly.
Gross Profit
Gross profits were $13,311 and $3,397 for the three months ended September 30,
2020 and 2019, respectively, an increase of $9,914 over the same period in 2019.
The increase of gross profit mainly due to other service provide by the company
have a higher gross margin than car services.
Gross profits were $25,982 and $6,143 for the September 30, 2020 and 2019,
respectively, an increase of $19,839 over the same period in 2019. The increase
of gross profit mainly due to other service provide by the company have a higher
gross margin than car services.
Operating Expenses
Operating expenses for the three months ended September 30, 2020 and 2019 were $
37,588 and $31,564 respectively for an increase of $6,024. The increase mainly
due to professional fee paid for OTC listed,
Operating expenses for the nine months ended September 30, 2020 and 2019 were
$70,355 and $109,571, respectively, a decrease of $39,216 or 35.79% from the
same period in 2019. The decrease mainly due to the effect of COVID-19 the
Company temporarily closed all offices in China and ceased operations from
January 19, 2020 to February 10, 2020.
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Other Income (Expense)
Other income consists of interest income and exchange gain (loss) for the three
months ended September 30, 2020 the net other expense were $1,521 when it was
net income of $89 for the same period in 2019.The change of other Income
(expense) mainly due to the change of exchange rate For the nine months ended
September 30, 2020 and 2019, the net other income were $1,440 and $1,582,
respectively with a decrease of $142. The decrease was mainly due to the change
of exchange rate.
Liquidity and Capital Resources
We suffered recurring losses from operations and have an accumulated deficit of
$276,141 as of September 30, 2021. We had a cash balance of $262,642 and working
capital of negative $97,961 as of September 30, 2021. The Company has incurred
losses of $93,821 and $42,933 for the nine months ended September 30, 2021 and
2020, 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, 2021, we have enough cash to last approximately
six months.
Net cash used in operating activities for the nine months ended September 30,
2021, amounted to $10,641, compared to $1,911 net cash used in operating
activities for the nine months ended September 30, 2020. 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 nine months ended
September 30, 2021 and 2020.
Net cash used in financing activities for the nine months ended September 30,
2021 amounted to $16,677, compared to net cash provided by financing activities
of $220,046 in the same period 2020. In June 2020, we completed the initial
public offering and received proceeds of $250,000 before deducting underwriting
discounts, commissions and other related expenses.
13
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. 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
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 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.
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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, 2021, 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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PONY GROUP INC. 