What changed in this filing

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Item 1. Business

2023-03-31 compared with 2022-03-31 · 274 added, 14 removed, 300 unchanged (49% of the section changed)

16 unchanged sentences

Our Corporate Structure

The following diagram illustrates our corporate

structure, including our subsidiaries as of the date of this Report:

We do not have or intend to set up any subsidiary

or enter into any contractual arrangements to establish a variable interest entity (“VIE”) structure with any entity in China.

The following diagram illustrates our corporate structure, including our subsidiaries as of the date of this Report:

Our holding company structure presents unique

risks as our investors may never directly hold equity interests in our Hong Kong or Shenzhen operating subsidiary and will be dependent

upon dividends and other distributions from our subsidiaries to finance our cash flow needs.

We are, however, not a Chinese or Hong Kong

operating company but a United States holding company with operations conducted by our subsidiaries.

Our ability to receive dividends

and other contributions from our subsidiaries are significantly affected by regulations promulgated by Hong Kong and PRC authorities.

Any change in the interpretation of existing rules and regulations or the promulgation of new rules and regulations may materially affect

our operations and or the value of our securities, including causing the value of our securities to significantly decline or become worthless.

For a detailed description of the risks facing the Company associated with our structure, please refer to “ Item 1A.

- Risks Related to Doing Business in China.”

Currently, PRC laws and

regulations do not prohibit direct foreign investment in our Hong Kong or Shenzhen operating subsidiary.

Nonetheless, in light of

the recent statements and regulatory actions by the PRC government, such as those related to Hong Kong’s national security,

the promulgation of regulations prohibiting foreign ownership of Chinese companies operating in certain industries, which are

constantly evolving, and anti-monopoly concerns, we may be subject to the risks of uncertainty of any future actions of the PRC

government in this regard, which would likely result in a material change in our operations, including our ability to continue our

existing holding company structure, carry on our current business, accept foreign investments, and offer or continue to offer

securities to our investors, and the resulting adverse change in value to our common stock.

We may also be subject to penalties and

sanctions imposed by the PRC or Hong Kong regulatory agencies, including the China Securities Regulatory Commission, or CSRC, if we

fail to comply with such rules and regulations, which would likely adversely affect the ability of the Company’s securities to

continue to trade on the OTCQB, which would likely cause the value of our securities to significantly decline or become

The Holding Foreign Companies Accountable Act (the “HFCA Act”)

and the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”)

As more stringent criteria applying to emerging

market companies upon assessing the qualification of their auditors have been imposed by the United States Securities and Exchange Commission

(the “SEC”) and the Public Company Accounting Oversight Board (the “PCAOB”) recently, and under the HFCA Act,

our securities may be prohibited from being traded on the over-the-counter (the “OTC”) markets if our auditor is not inspected

by the PCAOB for three consecutive years, and this ultimately could result in trading in our securities being prohibited.

The HFCA Act was enacted on December 18, 2020.

The HFCA Act states that if the SEC determines that an issuer’s audit reports issued by a registered public accounting firm have

not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such issuer’s

securities from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the

We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year under

a process to be subsequently established by the SEC.

If we fail to meet the new rules before the deadline specified thereunder, we could

face possible prohibition from trading on the OTCQB, deregistration from the SEC and/or other risks, which may materially and adversely

affect, or effectively terminate, our securities trading in the United States.

On December 2, 2021, the SEC issued amendments to finalize

rules implementing the submission and disclosure requirements in the HFCA Act.

The rules apply to registrants that the SEC identifies

as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction

and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

Furthermore, on June 22, 2021, the U.S.

passed the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”) , which would amend the HFCA Act and require

the SEC to prohibit an issuer’s securities from trading on any U.S.

stock exchanges or the OTC markets if its auditor is not subject

to PCAOB inspections for two consecutive years instead of three thus reducing the time before our securities may be prohibited from trading

or being delisted.

On December 29, 2022, the AHFCAA was signed into law.

On December 16, 2021, the PCAOB issued a determination,

under the HFCA Act, on registered public accounting firms headquartered in Hong Kong and the mainland China of the People’s Republic

of China that it is unable to inspect or investigate completely.

As of this Report, our auditor, BF Borgers CPA PC, is not headquartered

in China nor Hong Kong and thus is not subject to such determination.

As a firm registered

with the BF Borgers CPA PC is subject to laws in the United States which provide that the PCAOB shall conduct regular inspections to assess

the auditor’s compliance with the applicable professional standards.

We have no intention of dismissing BF Borgers CPA PC in the

future or engaging any auditor not based in the U.S.

and not subject to regular inspection by the PCAOB.

There is no guarantee, however,

that any future auditor engaged by the Company would remain subject to full PCAOB inspection during the entire term of our engagement.

If it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investor may be deprived of the benefits

of such inspection.

Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections

of audit work undertaken in China or Hong Kong that prevents the PCAOB from regularly evaluating our auditors’ audits and their

quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate.

On August 26, 2022, the PCAOB announced and signed

a Statement of Protocol (the “Protocol”) with the China Securities Regulatory Commission and the Ministry of Finance of the

People’s Republic of China.

The Protocol provides the PCAOB with:

(1) sole discretion to select the firms, audit engagements and

potential violations it inspects and investigates, without any involvement of Chinese authorities;

(2) procedures for PCAOB inspectors

and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed;

(3) direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates.

The PCAOB reassessed the 2021

PCAOB Determinations that the positions taken by PRC authorities prevented the PCAOB from inspecting and investigating in mainland China

and Hong Kong completely.

The PCAOB sent its inspectors to conduct on-site inspections and investigations of firms headquartered in mainland

China and Hong Kong from September to November 2022.

On December 15, 2022, the

PCAOB announced in its determination (the “2022 Determination”) that the PCAOB was able to secure complete access to inspect

and investigate accounting firms headquartered in mainland China and Hong Kong, and the PCAOB Board voted to vacate previous determinations

to the contrary.

Should the PCAOB again encounter impediments to inspections and investigations in mainland China or Hong Kong as a result

of positions taken by any authority in either jurisdiction, including by the CSRC or the Ministry of Finance, the PCAOB will make determinations

under the HFCAA as and when appropriate.

We cannot assure you whether OTC or regulatory authorities would apply additional and more stringent

criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of

personnel and training, or sufficiency of resources, geographic reach, or experience as it relates to the audit of our financial statements.

There is a risk that the PCAOB is unable to inspect or investigate completely the Company’s auditor because of a position taken

by an authority in a foreign jurisdiction or any other reasons, and that the PCAOB may re-evaluate its determinations as a result of any

obstruction with the implementation of the Protocol.

Such lack of inspection or re-evaluation could cause trading in the Company’s

securities to be prohibited under the HFCAA ultimately result in a determination by a securities exchange to delist the Company’s

In addition, under the HFCAA as amended by the AHFCAA, our securities may be prohibited from trading on the OTC or other U.S.

stock exchanges if our auditor is not inspected by the PCAOB for two consecutive years, and this ultimately could result in our ordinary

shares being delisted by and exchange.

Future developments in

respect of increased U.S.

regulatory access to audit information are uncertain, as the legislative developments are subject to the legislative

process and the regulatory developments are subject to the rule-making process and other administrative procedures.

See also “ Item 1A.

Risk Factors - Risks

Related to Doing Business in China - Holding Foreign Companies Accountable Act, or the HFCAA, and the related regulations are evolving

Further implementations and interpretations of our amendments to the HFCAA or the related regulations, or a PCAOB’s determination

of its lack of sufficient access to inspect our auditor, might pose regulatory risks to and impose restrictions on us because of our operations

in mainland China that PCAOB may not be able to inspect or investigate completely such audit documentation and, as such, you may be deprived

of the benefits of such inspection and our ordinary share could be delisted from the stock exchange pursuant to the HFCAA .

Regulatory Permissions and Developments

We have determined that the laws and regulations

of the PRC do not currently have any material impact on our business, financial condition or results of operations.

However, there is

no assurance that there will not be any changes in the economic, political and legal environment in Hong Kong, where Pony HK operates,

in the future.

If there is significant change to current political arrangements between mainland China and Hong Kong, companies operated

in Hong Kong such as us may face similar regulatory risks as those operated in PRC, including their ability to offer securities to investors,

list their securities on a U.S.

or other foreign exchange, conduct their business or accept foreign investment.

In light of China’s

recent expansion of authority in Hong Kong, there are risks and uncertainties which we cannot foresee for the time being, and rules and

regulations in China can change quickly with little or no advance notice.

The Chinese government may intervene or influence our current

and future operations in Hong Kong at any time, or may exert more control over offerings conducted overseas and/or foreign investment

in issuers likes ourselves.

See “ Item 1A.

Risk Factors - Risks Related to Doing Business in China .”

Except for the Basic Law, national laws of

the PRC do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation.

National laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense

and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong.

National laws and regulations relating

to data protection, cybersecurity and anti-monopoly have not been listed in Annex III and do not apply directly to Hong Kong and, as

such, the CAC and CSRC do not currently have jurisdiction over companies operating in Hong Kong.

In addition, in light of the recent statements

and regulatory actions by the PRC government, such as those related to Hong Kong’s national security, the promulgation of regulations

prohibiting foreign ownership of Chinese companies operating in certain industries, which are constantly evolving, and anti-monopoly

concerns, we may be subject to the risks of uncertainty of any future actions of the PRC government in this regard including the risk

that the PRC government could disallow our holding company structure, which may result in a material change in our operations, including

our ability to continue our existing holding company structure, carry on our current business, accept foreign investments, and offer

or continue to offer securities to our investors.

These adverse actions could cause the value of our securities to significantly decline

or become worthless.

We also have operations in mainland China through

our subsidiary Universe Travel and that the risks with regards to obtaining regulatory permissions equally apply to both our China and

Hong Kong operation.

We are aware that, recently, the PRC government initiated a series of regulatory actions and statements to regulate

business operations in certain areas in China with little advance notice, including cracking down on illegal activities in the securities

market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures

to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.

For example, on July 6, 2021, the

General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document

to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among

other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation,

to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application

of the PRC securities laws.

Also, on July 10, 2021, the Cyberspace Administration of China (the “CAC”) issued a revised draft

of the Measures for Cybersecurity Review for public comments, or the Revised Draft, which required that, among others, in addition to

“operator of critical information infrastructure”, any “data processor” controlling personal information of no

less than one million users (which to be further specified) which seeks to list in a foreign stock exchange should also be subject to

cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant

On February 24, 2023, the CSRC, the Ministry of Finance, the National

Administration of State Secrets Protection and the National Archives Administration jointly issued the Provisions on Strengthening Confidentiality

and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Confidentiality and Archives Provisions

(the “CAP”), which will take effective from March 31, 2023.

The Confidentiality and Archives Provisions specify that during

the overseas issuance of securities and listing activities of domestic enterprises, domestic enterprises and securities companies and

securities service institutions that provide relevant securities services shall, by strictly abiding by the relevant laws and regulations

of the PRC and the requirements therein, establish sound confidentiality and archives management systems, take necessary measures to implement

confidentiality and archives management responsibilities, and shall not leak national secrets, work secrets of governmental agencies and

undermine national and public interests.

Work manuscripts generated in the PRC by securities companies and securities service institutions

that provide relevant securities services for overseas issuance and listing of securities by domestic enterprises shall be kept in the

Without the approval of relevant competent authorities, it shall not be transferred overseas.

Where archives or copies need to be

transferred outside of the PRC, it shall be subject to the approval procedures in accordance with relevant PRC regulations.

Based on the Company’s understanding of the

current PRC laws, as of the date of this report, we have determined that we, and our subsidiaries, are not currently required to obtain

any permission approval or business licenses from the CSRC, the CAC or any other regulatory authority in the PRC or in Hong Kong for our

operations, the trading of our securities on the OTCQB and the offering of our securities to foreign investors.

The CSRC currently has

not issued any definitive rule or interpretation concerning whether we are subject to the CAP.

In addition, the business of our Hong Kong

subsidiary, Pony HK is not subject to cybersecurity review with the CAC, given that PRC laws on data protection and cybersecurity do not

currently apply to Hong Kong.

Further, for our Shenzhen subsidiary, Universe Travel, and to the extent that if we become subject to such

PRC laws in the future, we do not believe we are required to conduct a cybersecurity review because (i) we do not possess a large amount

of personal information on more than one million users in our business operations;

and (ii) data processed in our business does not have

a bearing on national security and thus may not be classified as core or important data by the authorities.

However, our operations could

be adversely affected, directly or indirectly, by future laws and regulations relating to our business or industry, if we inadvertently

conclude that such approvals or permissions are not required when they are, or applicable laws, regulations, or interpretations change

and we are required to obtain approvals or permissions in the future.

We may be subject to penalties and sanctions imposed by the PRC

or Hong Kong regulatory agencies, including the CSRC, if we fail to comply with such rules and regulations, which could adversely affect

the ability of the Company’s securities to continue to trade on the OTCQB, which may cause the value of our securities to significantly

decline or become worthless.

There may be prominent risks associated with

Pony HK’s operations being in Hong Kong and Universe Travel being the PRC.

For example, as a U.S.-listed public company with business

revenue derived primarily from our PRC-subsidiary, we may face heightened scrutiny, criticism and negative publicity, which could result

in a material change in our operations and the value of our common stock.

Additionally, Pony HK is subject to certain legal and operational

risks associated with our business operations in Hong Kong, which is subject to political and economic influence from China.

and regulations governing our current business operations are sometimes vague and uncertain, and we may face the risk that changes in

the policies of the PRC government could have a significant impact upon the business we conduct, through our subsidiaries Pony HK and

Universe Travel, in Shenzhen and in Hong Kong and the profitability of such business.

Therefore, these risks associated with having part

of our operations in Hong Kong could likely cause the value of our securities to significantly decline or be worthless.

these risks would likely result in a material change in our business operations or a complete hinderance of our ability to offer or continue

to offer our securities to investors.

In addition, changes in Chinese internal regulatory mandates, such as the Regulations on Mergers

and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), the Anti-Monopoly Law, the Cybersecurity

Law and the Data Security Law, may target the Company’s corporate structure and impact our and our subsidiaries’ ability

to conduct business in Hong Kong and in Shenzhen, accept foreign investments, or list on an U.S.

or other foreign exchange.

including the SEC, has recently made statements and taken certain actions that may lead to significant changes to U.S.

and international

relations, and will impact companies with connections to the United States or China (including Hong Kong).

The SEC has issued statements

primarily focused on companies with significant China-based operations.

For example, on July 30, 2021, Gary Gensler, Chairman of the SEC,

issued a Statement on Investor Protection Related to Recent Developments in China, pursuant to which Chairman Gensler stated that he has

asked the SEC staff to engage in targeted additional reviews of filings for companies with significant China-based operations.

For a detailed description of the risks facing

the Company and the risks associated with having our operations in Hong Kong, please refer to “ Item 1A.

Risk Factors -

Risks Related to Doing Business in China.

The business nature of the Company is to provide

43 unchanged sentences

Customer Services

We lease an office at Engineer Experiment Building, A202, 7 Gaoxin

South Avenue, Nanshan District, Shenzhen, Guangdong Province, China, encompassing approximately 205 square meters of space for a monthly

rent of RMB 10,000 (approximately $1,570).

We lease an office at Engineer Experiment Building,

A202, 7 Gaoxin South Avenue, Nanshan District, Shenzhen, Guangdong Province, China, encompassing approximately 205 square meters of space

for a monthly rent of RMB 10,000 (approximately $1,570).

The lease for this facility expires on February 28, 2024.

We believe the rented space is sufficient

for our current operations.

We believe the

rented space is sufficient for our current operations.

We believe our facilities are sufficient for our current needs.

We currently do not have any insurance coverage

other than participation in various governm 可 ent statutory social

security plans, including a pension contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injury

insurance plan, a maternity insurance plan and a housing provident fund.

other than participation in various government statutory social security plans, including a pension contribution plan, a medical insurance

plan, an unemployment insurance plan, a work-related injury insurance plan, a maternity insurance plan and a housing provident fund.

Legal Proceedings

31 unchanged sentences

Foreign Investment (Negative List) (2019 Edition), or the Negative List (2019) to replace the Negative List (2018), effective in July

The Negative List (2019) has reduced 8 special management measures in the Negative List (2018).

On December 28, 2020, the National Development and Reform Commission and the Ministry of Commerce publicly released the Directory

of Industries to Encourage Foreign Investment (Encouraged Catalogue) (2020 Edition).

On December 27, 2021, NDRC and MOFCOM jointly issued

the Special Administrative Measures for Foreign Investment Access (Negative List) (2021 Edition), and the Special Administrative Measures

for Foreign Investment Access in Pilot Free Trade Zones (Negative List) (2021 Edition), effective January 1, 2022.

As per these policies,

the national negative list of foreign investment access was reduced from 33 to 31, and the negative list of foreign investment access

in the free trade zone was reduced from 30 to 27.

Industries listed in the 2020 Encouraged Catalogue are the encouraged industries.

the other hand, industries listed in the 2021 Negative List are subject to special management measures.

For example, establishment of

wholly foreign-owned enterprises is generally allowed in industries outside of the 2021 Negative List.

Also, foreign investors are not

allowed to invest in industries that are expressly prohibited in the 2021 Negative List.

The industries that are not expressly prohibited

in the Negative List are still subject to government approvals and certain special requirements.

We believe that our current business

is to provide travel services and therefore falls in neither the Negative List (2018) nor the Negative List (2019).

is to provide travel services and therefore we do not falls in the Negative List (2021), the Negative List (2018) nor the Negative List

Foreign Investment Law

14 unchanged sentences

five years after the implementing of the Foreign Investment Law.

Interim Administrative Measures for the Record-filing of the Incorporation

and Change of Foreign-invested Enterprises

Measures for Reporting of Foreign Investment Information

On September 3, 2016, the Standing Committee of

8 unchanged sentences

detail instructions for foreign-invested enterprise to carry out record filing in terms of the change of the enterprise in China.

On December 30, 2019, MOFCOM and the State Administration for Market

Regulation jointly issued the Measures for Reporting of Foreign Investment Information, or the Foreign Investment Information Measures,

which came into effect on January 1, 2020 and replaced the Interim Measures.

Since January 1, 2020, for foreign investors carrying out

investment activities directly or indirectly in the PRC, foreign investors or foreign-invested enterprises shall submit investment information

through the Enterprise Registration System and the National Enterprise Credit Information Publicity System operated by the State Administration

for Market Regulation.

Foreign investors or foreign-invested enterprises shall disclose their investment information by submitting reports

for their establishments, modifications and cancellations and their annual reports in accordance with the Foreign Investment Information

If a foreign-invested enterprise investing in the PRC has finished submitting its reports for its establishment, modifications

and cancellation and its annual reports, the relevant information will be shared by the competent market regulation department to the

competent commercial department, and does not require such foreign-invested enterprise to submit the reports separately.

The M&A Rules

174 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business