10-K: Pony Group Reports Wider Losses, Going Concern Doubts Mount

Pony Group Inc. reported a significant increase in net losses for the fiscal year ended December 31, 2025, despite a rise in revenue, raising substantial doubt about its ability to continue as a going concern.

Summary

• Net loss widened to $246,429 for the year ended December 31, 2025, compared to $164,074 in 2024.
• Revenue increased by 45.17% to $141,393 in 2025 from $97,394 in 2024, primarily due to a new client, Benfu Development., Ltd.
• Gross profit increased to $47,359 in 2025 from $41,921 in 2024, but the gross profit margin decreased to 33.0% from 43.0% due to competitive pricing.
• Operating expenses rose by 43.0% to $293,018 in 2025, mainly due to accrued service fees for consulting.
• The company has an accumulated deficit of $1,134,923 and a working capital deficit of $957,971 as of December 31, 2025.
• Cash and cash equivalents stood at $9,675 as of December 31, 2025.
• The independent auditor's report includes an explanatory paragraph on substantial doubt about the company's ability to continue as a going concern.
• Management identified material weaknesses in internal control over financial reporting, including a lack of a functioning audit committee, inadequate segregation of duties, insufficient written policies, and ineffective controls over period-end financial disclosure.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this as a highly concerning report due to widening losses, declining margins, significant accumulated and working capital deficits, and the auditor's going concern warning, despite revenue growth. The identified material weaknesses in internal controls further compound the negative sentiment.

Positives

• Revenue increased by $43,999 (45.17%) to $141,393 in 2025, driven by a new client, Benfu Development., Ltd, which contributed $55,159 in car services revenue.
• Gross profit increased by $5,438 to $47,359 in 2025.
• Net cash used in operating activities decreased to $101,270 in 2025 from $148,977 in 2024.
• The company's auditor, YCM CPA INC., is not headquartered in China or Hong Kong and is currently subject to PCAOB inspections, mitigating some Holding Foreign Companies Accountable Act (HFCAA) risks.
• Management plans to improve internal controls by appointing outside directors to an audit committee and implementing written policies and procedures.

Negatives

• Net loss significantly widened to $246,429 in 2025 from $164,074 in 2024.
• Gross profit margin decreased to 33.0% in 2025 from 43.0% in 2024, indicating pricing pressure or increased cost of services.
• Operating expenses increased substantially by 43.0% to $293,018 in 2025.
• Accumulated deficit of $1,134,923 and working capital deficit of $957,971 as of December 31, 2025.
• Cash balance is very low at $9,675 as of December 31, 2025.
• Substantial doubt exists about the company's ability to continue as a going concern, as noted by the independent auditor.
• Significant customer concentration, with two customers accounting for approximately 58% of 2025 revenue.
• Material weaknesses in internal control over financial reporting, including lack of a functioning audit committee and inadequate segregation of duties.
• The company has a limited operating history and has not grown revenue substantially since inception.
• The company currently does not have any intellectual property.
• Intense competition in the car service industry from larger, more resourced competitors.
• No insurance coverage other than participation in government statutory social security plans.
• Majority stockholders (Ms. Wenxian Fan) control over 72% of the company, limiting the influence of other shareholders.
• No active public market for common stock currently exists, and it is thinly traded, considered a penny stock.
• No plans to pay cash dividends in the foreseeable future.

Risks

• The company is an early-stage company with a limited operating history, providing an inadequate basis to judge future prospects.
• Intense competition in the car service industry could lead to loss of market share.
• Potential claims from riders, drivers, or third parties for harm could adversely affect the business and brand.
• Reliance on third-party service providers and car fleet companies poses risks if they do not perform adequately or terminate relationships.
• Failure to successfully develop new offerings and enhance existing ones could adversely affect the business.
• Any failure to offer high-quality user support may harm relationships with users and reputation.
• Systems failures and resulting interruptions in the availability of the website, applications, platform, or offerings could adversely affect the business.
• Business could be adversely impacted by changes in internet and mobile device accessibility or failure to comply with related laws.
• Reliance on mobile operating systems and application marketplaces to make apps available, with risks if functionality is degraded or terms are unfavorable.
• Significant customer concentration, with a limited number of customers accounting for a substantial portion of revenues.
• Dependence on the interoperability of the platform across third-party applications and services that are not controlled by the company.
• Failure to protect or enforce intellectual property rights could harm the business.
• Platform contains third-party open-source software components, and failure to comply with licenses could restrict offerings.
• Failure to maintain reputation and brand image could negatively impact the business.
• Success is dependent on retaining key personnel, particularly Ms. Wenxian Fan, who would be difficult to replace.
• Legal requirements associated with being a public company may make it difficult to retain or attract qualified officers and directors.
• Failure to establish and maintain an effective system of internal controls could lead to inaccurate financial reporting or fraud.
• Operating as a public company incurs substantial costs and requires significant management attention, with key management having limited public company experience.
• Changes in the political and economic policies of the PRC government may materially and adversely affect the business.
• Uncertainties exist regarding the interpretation and enforcement of PRC laws, rules, and regulations.
• The PRC government exerts substantial influence over business activities and may intervene or influence operations at any time.
• Failure to make adequate contributions to various employee benefit plans and withhold individual income tax as required by PRC regulations may subject the company to penalties.
• Worsening relations between the United States and China could reduce stock price.
• Fluctuation of the Renminbi may have a material adverse effect on investment.
• Restrictions on currency exchange may limit the ability to receive and use revenue effectively.
• The PRC's legal and judicial system may not adequately protect business operations and the rights of foreign investors.
• Difficulties for U.S. investors to enforce rights based on U.S. federal securities laws against the company or its subsidiaries in PRC and Hong Kong.
• Operations could be adversely affected by future PRC laws and regulations if approvals or permissions are inadvertently missed or laws change.
• Stockholders may face difficulties in protecting their interests and exercising their rights as the bulk of operations are in China.
• Uncertainties exist with respect to indirect transfers of equity interests in PRC resident enterprises or other assets.
• The Hong Kong legal system embodies uncertainties which could limit legal protections available to the Hong Kong subsidiary.
• The enactment of the Hong Kong National Security Law and the Safeguarding National Security Ordinance could impact the Hong Kong subsidiary.
• Hong Kong and Shenzhen subsidiaries may be subject to restrictions on paying dividends or making other payments to the holding company.
• Dividends payable to foreign investors and gains on the sale of common stock by foreign investors may become subject to tax by the PRC.
• The Holding Foreign Companies Accountable Act (HFCAA) and related regulations are evolving quickly, posing regulatory risks and potential delisting if the auditor is not inspected by the PCAOB for two consecutive years.
• Majority stockholders control the company for the foreseeable future, including matters requiring shareholder approval.
• No public market for common stock currently exists, and an active trading market may not develop or be sustained.
• The company may require additional funding, and inability to raise capital could force delays, reductions, or elimination of business portions.
• Substantial doubt about the company's ability to continue as a going concern.
• Raising additional capital may cause dilution to stockholders, restrict operations, or require relinquishing rights.
• Even if an active trading market develops, the market price for common stock may be volatile.
• Common stock may be thinly traded, making it difficult to sell at or near ask prices or at all.
• Common stock is considered a penny stock, subject to additional sale and trading regulations.
• FINRA sales practice requirements may limit the ability to buy and sell shares of common stock.
• Potential future sales under Rule 144 may depress the market price for common stock.
• Volatility in common stock price may subject the company to securities litigation.
• The company is not likely to pay cash dividends in the foreseeable future.
• U.S. investors may experience difficulties in attempting to effect a service of process and enforce judgments based upon U.S. Federal Securities Laws against the company and its non-U.S. resident officer and director.

Future Outlook

The company plans to expand its 'Lets Go' application to offer comprehensive, multi-language travel services, including ticket booking, hotel reservations, car rental, and English-speaking drivers, aiming to become an international player in the travel service market. This expansion will involve attracting users from outside China, cooperating with businesses for capital, marketing, and technology resources, and recruiting more workforce and talents. Management intends to secure additional capital through equity sales, bank borrowings, and related party loans to address its going concern issues and fund future operations.

Management Comments

• "We aim to provide our users with comprehensive and convenient service offerings and become a one-stop travel booking resource for travelers."
• "Our goal is to grow to an international player in the travel service market."
• "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."
• "Management is actively engaged in seeking additional capital to fund our operations in the short to medium term."
• "Management cannot provide any assurance that the Company will be successful in accomplishing any of its plans [to obtain additional capital]."
• "Our senior management, which currently consists of Ms. Fan, cannot guarantee that our internal controls and disclosure procedures will prevent all possible errors or all fraud."
• "We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company."

Industry Context

StockSavvy.ai notes that Pony Group operates in the highly competitive car service industry, particularly in the Guangdong-Hong Kong market. The industry is characterized by rapid technological changes and evolving rider needs. The company faces competition from larger, more established players with greater resources, which is reflected in its reduced gross profit margin due to competitive pricing. The company's strategy to become a "one-stop travel booking resource" and expand internationally indicates an ambition to diversify and scale beyond its current niche, a common trend among smaller players seeking differentiation in a crowded market.

Corporate Governance

Legal Proceedings

• The company is not currently a party to any material legal or administrative proceedings.
• Management is not aware of any threat of legal or administrative proceedings likely to have a material adverse effect.
• The company may become a party to various legal or administrative proceedings in the ordinary course of business in the future.

Related Party Transactions

• Wenxian Fan, the CEO, CFO, and Chair, loaned working capital to Pony HK and Universe Travel with no interest and paid for subcontracted services and employee salaries on behalf of the company.
• Payables to Wenxian Fan amounted to $770,653 as of December 31, 2025, an increase from $640,066 as of December 31, 2024.
• The company currently does not have a policy on related party transactions, and none of the disclosed transactions were approved by the Board. It plans to adopt such a policy in the near term.

Stakeholder Impact

• Shareholders: Face significant dilution risk from potential future equity raises. Majority shareholder (Wenxian Fan) controls 72% of voting power. Risk of delisting due to HFCAA. Illiquid market for common stock, considered a penny stock. No dividends expected. Difficulties in enforcing U.S. securities laws due to non-U.S. operations and management.
• Employees: Subject to PRC government-mandated employee benefit contribution plans and individual income tax withholding. Potential for late fees and fines if contributions are inadequate.
• Customers: Potential impact from changes in service offerings, quality of user support, and system failures. Customer concentration risk means reliance on a few key clients.
• Creditors: The company's going concern doubt and accumulated deficit raise concerns about its ability to meet future obligations. Related party loans from Ms. Fan are significant.
• Suppliers: The company has significant supplier concentration, with Yahong Business Limited accounting for 78.26% of total cost in 2025. This creates dependence and potential risk if the relationship changes.

Next Steps

• Attract users from outside of China for the 'Lets Go' App.
• Expand offerings on the 'Lets Go' App to include ticket booking, hotel reservations, car rental, and English-speaking drivers.
• Cooperate with other businesses for capital, marketing, and technology resources.
• Recruit more workforce and talents.
• Develop new technologies and products.
• Obtain additional capital through equity sales, bank borrowings, or related party loans.
• Appoint one or more outside directors to the board to form a functioning audit committee.
• Prepare and implement sufficient written policies and checklists for accounting and financial reporting.
• Create a position to segregate duties consistent with control objectives and increase personnel resources and technical accounting expertise within the accounting function when funds are available.

Key Dates

Recommendation

The company faces severe financial distress, evidenced by widening net losses, a substantial accumulated deficit, and a critical working capital deficit. The auditor's explicit "going concern" warning, coupled with significant material weaknesses in internal controls, indicates fundamental operational and governance issues. While revenue increased, the decline in gross profit margin suggests unsustainable pricing strategies. The high concentration of ownership and related-party debt, alongside the inherent regulatory and geopolitical risks of operating in China and Hong Kong, further amplify the investment risk. The potential for delisting under the HFCAA and the illiquid nature of its "penny stock" status make it a highly speculative and risky investment.

Keywords

Car services, Ride-hailing, Transportation, China, Hong Kong, Guangdong Province, SEC filing, 10-K, Financial results, Net loss, Revenue, Going concern, Corporate governance, Risk factors, PNYG, Travel technology, Cybersecurity, PCAOB, HFCAA, Internal controls