Pony Group Inc. 10-K

Item 8. Financial Statements and Supplementary Data The financial statements required by this item begin on page F-1 hereof. Index to Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID #5041) F-1 Financial Statements: Consolidated Balance Sheets as of December 31, 2022 and 202 1 F-2 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2022 and 202 1 F-3 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2022 and 2021 F-4 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 202 1 F-5 Notes to Consolidated Financial Statements F-6 F- 1 Report of Independent Registered Public Accounting Firm To the shareholders and the board of directors of Pony Group, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Pony Group, Inc. as of December 31, 2022 and 2021, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /S/ BF Borgers CPA PC BF Borgers CPA PC (PCAOB ID 5041 ) We have served as the Company’s auditor since 2019 Lakewood, CO March 31, 2023 F- 2 PONY GROUP INC., AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2022 December 31, 2021 Assets Current assets Cash and cash equivalents $ 49,803 $ 266,011 Accounts receivables 10,723 47,838 Other receivables 285 301 Other receivables-related parties 8,998 8,998 Total current assets 69,809 323,148 Total assets $ 69,809 $ 323,148 Liabilities and Equity Current liabilities Accounts payable $ 31,343 $ 37,052 Other payable- related parties 378,753 286,150 Other current liability 15,257 102,930 Total current liabilities 425,353 426,132 Total liabilities $ 425,353 $ 426,132 Equity Ordinary shares, $ 0.001 par value, 70,000,000 shares authorized, 11,500,000 shares issued and outstanding as of December 31, 2022 and 2021, respectively* 11,500 11,500 Additional paid-in capital 176,000 176,000 Accumulated foreign currency exchange loss 6,360 ( 10,158 ) Accumulated deficit ( 549,404 ) ( 280,326 ) Total Pony Group Inc stockholders’ equity ( 355,544 ) ( 102,984 ) Total equity ( 355,544 ) ( 102,984 ) Total liabilities and equity $ 69,809 $ 323,148 * The shares are presented on a retroactive basis to reflect the nominal share issuance. The accompanying notes are integral to these consolidated financial statements. F- 3 PONY GROUP INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For The Year Ended December 31, 2022 2021 Revenue $ 112,844 $ 157,627 Cost of revenue 45,001 102,314 Gross profit 67,843 55,313 Operating expenses General & administrative expenses 318,652 160,812 R&D expense 23,816 10,464 Total operating expenses 342,468 171,276 Income (loss) from operation ( 274,625 ) ( 115,963 ) Other income (expenses) Other income (expense) 5,547 17,957 Total other income 5,547 17,957 Loss before income taxes ( 269,078 ) ( 98,006 ) Provision for income tax Net Loss $ ( 269,078 ) $ ( 98,006 ) Net Loss ( 269,078 ) ( 98,006 ) Other Comprehensive Income Comprehensive loss $ ( 269,078 ) $ ( 98,006 ) Basic and diluted earnings (loss) per common share* $ ( 0.023 ) $ ( 0.009 ) Weighted average number of shares outstanding* 11,500,000 11,500,000 * The shares are presented on a retroactive basis to reflect the nominal share issuance. The accompanying notes are integral to these consolidated financial statements. F- 4 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 - - - - ( 3,835 ) - ( 3,835 ) Net (Loss) - - - $ - - ( 98,006 ) ( 98,006 ) Balance as of December 31, 2021 11,500,000 $ 11,500 $ 176,000 $ - ( 10,158 ) ( 280,326 ) ( 102,984 ) Cumulative Foreign currency translation adjustment - - - - 16,518 16,518 Net (Loss) - - - - ( 269,078 ) ( 269,078 ) Balance as of December 31, 2022 11,500,000 $ 11,500 $ 176,000 $ - 6,360 ( 549,404 ) ( 355,544 ) * The shares are presented on a retroactive basis to reflect the nominal share issuance. The accompanying notes are integral to these consolidated financial statements. F- 5 PONY GROUP INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Year Ended December 31, 2022 2021 Operating activities Net Loss $ ( 269,078 ) $ ( 98,006 ) Changes in operating assets and liabilities: Accounts receivable 37,115 ( 7,133 ) Other receivable 16 ( 135 ) Accounts payable ( 5,709 ) 27,461 Other payable ( 87,673 ) 75,035 Cash provided (used) in operating activities ( 325,329 ) ( 2,778 ) 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 92,603 ( 14,333 ) Proceed from Issue of Common Stock - - Cash provided by financing activities 92,603 ( 14,333 ) Effects of currency translation on cash 16,518 ( 3,835 ) Net increase (decrease) in cash ( 216,208 ) ( 20,946 ) Cash at beginning of the period 266,011 286,957 Cash at end of period $ 49,803 $ 266,011 The accompanying notes are integral to these consolidated financial statements. F- 6 PONY GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES Organization and Operations PONY GROUP INC, (The “Company” or “PONY”) was incorporated on Jan 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 07, 2019, this transaction was completed. PONY LIMOUSINE SERVICES LIMITED (“PONYHK”) is a limited liability company 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 December 31, 2022 is 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. F- 7 As of December 31, 2022 and December 31, 2021, accounts receivable were $ 10,723 and $ 47,838 , respectively. The company considers accounts receivable to be fully collectible and determined that an allowance for doubtful accounts was not necessary. The PONY LIMOUSINE SERVICES LIMITED, 100 % subsidiary of the company has agreements with its two major clients that the payments for the services rendered be settled every six months. The two major clients combined accounted for 48.24 % of the revenue for the year ended December 31, 2022, respectively. Revenue Recognition - The Company recognizes revenue in accordance with ASC 606. The core principle of ASC606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASC 606 defines a five-step process to achieve this core principle, which includes: (1) identifying contracts with customers, (2) identifying performance obligations within those contracts, (3) determining the transaction price, (4) allocating the transaction price to the performance obligation in the contract, which may include an estimate of variable consideration, and (5) recognizing revenue when or as each performance obligation is satisfied. Our sales arrangements generally ask customers to pay in advance before any services can be arranged. The company recognizes revenue when each performance obligation is satisfied. Documents and terms and the completion of any customer acceptance requirements, when applicable, are used to verify services rendered. The Company has no returns or sales discounts and allowances because services rendered and accepted by customers are normally not returnable. Cost of revenue – Cost of revenue includes cost of services rendered during the period, net of discounts and sales tax. Income Taxes – Income tax expense represents current tax expense. The income tax payable represents the amounts expected to be paid to the taxation authority. Hong Kong profits tax has been provided at the rate of 16.5 % on the estimated assessable profit for the period. Foreign Currency Translation - PONY LIMOUSINE SERVICES LIMITED’s functional currency is the Hong Kong Dollar (HK$) and Universe Travel Culture & Technology Ltd.’s functional currency is the Renminbi (RMB). The reporting currency is that of the US Dollar. Assets, liabilities and owners’ contribution are translated at the exchange rates as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the year. The exchange rates used to translate amounts in HK$ and RMB into USD for the purposes of preparing the financial statements were as follows: December 31, 2022 Balance sheet HK$ 7.80 to US $ 1.00 RMB 6.89 to US $ 1.00 Statement of operation and other comprehensive income HK$ 7.83 to US $ 1.00 RMB 6.73 to US $ 1.00 December 31, 2021 Balance sheet HK$ 7.80 to US $ 1.00 RMB 6.37 to US $ 1.00 Statement of operation and other comprehensive income HK$ 7.77 to US $ 1.00 RMB 6.45 to US $ 1.00 NOTE 2 - GOING CONCERN The Company had operating losses of $ 269,078 and $ 98,006 during the year ended December 31, 2022 and 2021, respectively. The Company has accumulated deficit of $ 549,404 and $ 280,326 as of December 31, 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. F- 8 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 Jan 7, 2019 in the state of Delaware, is the sole owner of PONY LIMOUSINE SERVICES LIMITED (Pony HK), as of December 31, 2022, Pony HK has paid $ 285,600 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 p resent the nominal shares, the considerations and receivable form shareholders also should be represented. December 31, 2022 December 31, 2020 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: December 31, 2022 December 31, 2021 To Wenxian Fan $ 378,753 $ 286,150 Total due to related parties $ 378,753 $ 286,150 NOTE 4 - MAJOR SUPPLIERS AND CUSTOMERS The Company purchased majority of its subcontracted services from one major suppliers for the year ended December 31, 2022: CHANGYING BUSINESS LIMITED representing 96.03%. The Company had two major customers for the year ended December 31, 2022: Shenzhen Shangjia Electronic Technology., Ltd (“Shangjia”) for 51.14 % of revenue and HK Gangjianxiang Trade Co Ltd. (“Gangjianxiang”) for 48.24 % of revenue. F- 9 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 was 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 March 1, 2023, the date which the financial statements were available to be issued. All subsequent events requiring recognition as of December 31, 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.” F- 10