UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
FORM
(Mark one)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission
file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of principal executive offices)
(Issuer’s telephone number)
Securities Registered Pursuant to Section 12(g) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each Exchange on which Registered | ||
| OTCQB |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date: As of November 11, 2024, there were shares of the registrant’s common stock outstanding.
VIVIC CORP.
FORM 10-Q
September 30, 2024
INDEX
| 2 |
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This report contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on forward-looking statements. Forward-looking statements include, among other things, statements relating to:
| ● | our goals and strategies; | |
| ● | our future business development, financial condition and results of operations; | |
| ● | our expectations regarding demand for, and market acceptance of, our products; | |
| ● | our expectations regarding keeping and strengthening our relationships with merchants, manufacturers and end-users; and | |
| ● | general economic and business conditions in the regions where we provide our services. |
Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and filed as exhibits to the report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
Use of Certain Defined Terms
Except where the context otherwise requires and for the purposes of this report only:
“Vivic,” the “Company,” “we,” “us,” and “our” refer to Vivic Corp. and its subsidiaries;
“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
“Hong Kong” refers to the Hong Kong Special Administrative Region of the People’s Republic of China;
“PRC,” “China,” and “Chinese,” refer to the People’s Republic of China (excluding Hong Kong and Taiwan);
“Renminbi” and “RMB” refer to the legal currency of China;
“Securities Act” refers to the Securities Act of 1933, as amended;
“Taiwan” refers to the Republic of China;
“TWD” refers to the Taiwanese dollar, the legal currency of Taiwan; and
“US dollars,” “dollars” and “$” refer to the legal currency of the United States.
| 3 |
PART I - FINANCIAL INFORMATION
VIVIC CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September
30, 2024 | June
30, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable - related party | ||||||||
| Note receivable | ||||||||
| Deposit and prepayments | ||||||||
| Deposit and prepayments - related party | ||||||||
| Other receivables | ||||||||
| Inventory | ||||||||
| Due from related parties | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable - related party | ||||||||
| Accrued liabilities and other payables | ||||||||
| Deferred revenue | ||||||||
| Tax payable | ||||||||
| Due to related parties | ||||||||
| Short-term loan | ||||||||
| Total current liabilities | ||||||||
| Non-Current liabilities | ||||||||
| SBA loan payable | ||||||||
| Long-term loan | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, $ par value; shares authorized; shares issued and outstanding as of September 30, 2024 and June 30, 2024 | ||||||||
| Common stock, $ par value; shares authorized; shares issued and outstanding as of September 30, 2024; and shares issued and outstanding as of June 30, 2024 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 4 |
VIVIC CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
| For
the Three Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Revenue | $ | $ | ||||||
| Revenue- related party | ||||||||
| Total revenue | ||||||||
| Cost of sales | ||||||||
| Gross profit (loss) | ( | ) | ||||||
| Operating expenses | ||||||||
| Share-based compensation | ||||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expenses) | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Other expenses, net | ( | ) | ( | ) | ||||
| Total other expenses, net | ( | ) | ( | ) | ||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax provision | ||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Net income from discontinued operations | ||||||||
| Net income (loss) for the period | $ | ( | ) | $ | ||||
| Other comprehensive item | ||||||||
| Foreign
currency translation gain (loss) | ( | ) | ||||||
| COMPREHENSIVE INCOME (LOSS) | $ | ( | ) | $ | ||||
| Weighted average common stock outstanding | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| Net income (loss) from per share of common stock – Basic | $ | ( | ) | $ | ||||
| Net income (loss) from per share of common stock – Diluted | $ | ( | ) | $ | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 5 |
VIVIC CORP.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024
(UNAUDITED)
| Preferred stock | Common stock | Additional | Accumulated other | Total | ||||||||||||||||||||||||||||
| No.
of shares | Amount | No.
of shares | Amount | paid-in capital | comprehensive income | Accumulated loss | shareholders’
| |||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023
(UNAUDITED)
| Preferred stock | Common stock | Additional | Accumulated other | Total | ||||||||||||||||||||||||||||
| No.
of shares | Amount | No.
of shares | Amount | paid-in capital | comprehensive income | Accumulated loss | shareholders’ | |||||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income for the period | - | - | ||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 6 |
VIVIC CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For
the Three Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | ( | ) | |||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation and amortization expenses | ||||||||
| Stock compensation expenses | ||||||||
| Gain on disposal of subsidiaries | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Accounts receivable - related party | ||||||||
| Note receivable | ||||||||
| Deposit and prepayments | ( | ) | ||||||
| Deposit and prepayments- related party | ( | ) | ||||||
| Other receivables | ( | ) | ( | ) | ||||
| Inventory | ||||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accounts payable - related party | ( | ) | ||||||
| Accrued liabilities and other payables | ||||||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Tax payables | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from related parties | ||||||||
| Repayment to related parties | ( | ) | ( | ) | ||||
| Net cash provided by (used in) continuing operations | ( | ) | ||||||
| Effect of exchange rate change on cash and cash equivalents | ( | ) | ||||||
| NET DECREASE IN CASH & CASH EQUIVALENTS | ( | ) | ( | ) | ||||
| CASH & CASH EQUIVALENTS, BEGINNING OF THE PERIOD | ||||||||
| CASH & CASH EQUIVALENTS, END OF THE PERIOD | $ | $ | ||||||
| Supplemental Cash Flows Information: | ||||||||
| Cash paid for income tax | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental disclosures of non-cash financing activities: | ||||||||
| Shares issued as prepayment to the Company’s Chairman and Directors | $ | 1,610,000 | $ | - | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 7 |
VIVIC CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE– 1 ORGANIZATION AND BUSINESS BACKGROUND
VIVIC CORP. (the “Company” or “VIVC”) was established under the corporate laws of the State of Nevada on February 16, 2017. Beginning with a change in management resulting from a change in control of the Company which occurred at the end of 2018, the Company has explored and initiated operations in a number of business areas related to the pleasure boat industry. These included yacht sales, marine tourism, development of electric powered yachts, development and operation of yacht marinas in Asia and the development of a yacht rental and time share service. More recently, the Company determined to focus its efforts on yacht sales in Taiwan and other selected regions throughout the world. The Company is the exclusive distributor of Monte-Fino yachts in the People’s Republic of China, the Philippines and the Middle East. Monte Fino is a well-known brand owned by Taiwan Kha Shing Yacht Company, one of the leading yacht manufacturers in the world.
The Company’s headquarters are maintained at its branch in the Republic of China (“ROC” or “Taiwan”), Vivic Corp. Taiwan Branch (“Vivic Taiwan”). It is mainly engaged in yacht procurement, sales, and leasing services in Taiwan and other countries.
On
July 12, 2023, Vivic Corporation (Hong Kong) Co. Limited (“Vivic Hong Kong”), a wholly-owned subsidiary of the Company, entered
into a Stock Purchase Agreement with Yun-Kuang Kung (Mr. “Kung”, son of Shang-Chiai Kung, the Company’s principal shareholder,
President and Chief Executive Officer), pursuant to which, Mr. Kung acquired all of the shares of the Company’s wholly owned subsidiary
Guangdong Weiguan Ship Tech Co., Ltd (“Weiguan Ship”). In consideration for its interest in Weiguan Ship, the Company received
RMB
Description of subsidiaries as of September 30, 2024 is as follows:
| Name | Place of incorporation and kind of legal entity | Principal activities and place of operation | Particulars of issued/ registered share capital | Effective interest held | ||||||
| Vivic Corporation (Hong Kong) Co., Limited | ordinary shares for
HK$ | % | ||||||||
| Vivic Corp. Taiwan Branch | Registered: TWD Paid Up: TWD | % | ||||||||
On October 9, 2024, the Board of Directors of the Company adopted a resolution changing the fiscal year end of the Company to June 30, effective June 30, 2024. Management believes the change will cause the Company’s annual financial statements to more accurately reflect the Company’s performance and facilitate the timely preparation of its periodic reports required to be filed with the Securities and Exchange Commission.
| 8 |
NOTE– 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying unaudited condensed consolidated financial statements and notes.
● Basis of presentation
These accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).
● Use of estimates
Preparing these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Such estimates may be subject to change as more current information becomes available. Actual results may differ from these estimates.
● Principles of consolidation
The unaudited condensed consolidated financial statements include the financial statements of VIVC and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
● Cash and cash equivalents
Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. Cash equivalents consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments.
● Credit losses
On January 1, 2023, the Company adopted Accounting Standards Update 2016-13 “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The adoption of the credit loss accounting standard has no material impact on the Company’s unaudited condensed consolidated financial statements as of January 1, 2023.
The Company’s account receivables and other receivables in the balance sheet are within the scope of ASC Topic 326. As the Company has limited customers and debtors, the Company uses the loss-rate method to evaluate the expected credit losses on an individual basis. When establishing the loss rate, the Company makes the assessment based on various factors, including historical experience, credit-worthiness of customers and debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from the customers and debtors. The Company also provides specific provisions for allowance when facts and circumstances indicate that a receivable is unlikely to be collected.
Expected credit losses are recorded as allowance for credit losses on the unaudited condensed consolidated statements of operations. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. In the event the Company recovers an amount that it previously reserved for, the Company will reduce the specific allowance for credit losses.
● Accounts receivable
Accounts
receivable are recorded at the invoiced amount and do not bear interest and are due within contractual payment terms, generally 30 to
90 days from completion of service. Credit is extended based on an evaluation of a customer’s financial condition, the customer’s
credit-worthiness and payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past
due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. Under the current expected
credit loss model, at the end of each period, the Company specifically evaluates each individual customer’s financial condition,
credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company considers
the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments.
For receivables that are past due or not being paid according to payment terms, appropriate actions are taken to collect the amounts
due, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all reasonable
means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet
credit exposure related to its customers. As of September 30, 2024 and June 30, 2024, the Company had
| 9 |
● Advances to Suppliers
The
Company makes advances to certain vendors to purchase finished goods and service. The advances are interest-free and unsecured. As
of September 30, 2024 and June 30, 2024, the Company had advanced to suppliers of $
● Inventories
Inventories are stated at the lower of cost or net realizable value with cost determined on a weighted-average basis. Management compares the cost of inventories with the net realizable value and an allowance is made to write down inventories to market value, if lower.
● Property and equipment
Property, plant, and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on a straight-line basis over the following expected useful lives from the date on which assets become fully operational and after taking into account their estimated residual values:
| Expected useful life | ||||
| Service yacht | ||||
| Motor vehicle | ||||
| Office equipment |
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
● Intangible assets, net
Intangible
assets are stated at cost less accumulated amortization. Intangible assets represent the trademark registered in the PRC and purchased
software which are amortized on a straight-line basis over a useful life of
The
Company follows ASC Topic 350 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of
impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying
amounts. During the three months ended September 30, 2024 and 2023, there were
● Deferred revenue
Deferred revenue represents advance payments made by a customer for goods and services the Company will provide in the future. Due to its short-term nature, deferred revenue is usually satisfied within the 12 months.
| 10 |
● Revenue recognition
In accordance with Accounting Standard Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”, the Company recognizes revenues when goods or services are transferred to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. In determining when and how revenues are recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations, and (v) recognition of revenues when (or as) the Company satisfies each performance obligation. The Company derives revenues from processing, distribution, and sales of its products, mainly yachts. The Company recognize its revenue at a point in time when the control of the products has been transferred to customers.
● Comprehensive income (loss)
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components, and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying unaudited condensed consolidated statements of stockholders’ equity deficit, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income (loss) is not included in the computation of income tax expense or benefit.
● Income taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
The Company is subject to tax in local and foreign jurisdictions. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax authorities.
● Foreign currencies translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the unaudited condensed consolidated statements of operations.
The reporting currency of the Company is the United States Dollar (“US$”) and the accompanying unaudited condensed consolidated financial statements have been expressed in US$. In addition, the Company and its subsidiaries operating or which operated in the PRC, Taiwan and Hong Kong, maintain their books and records in their local currency, Renminbi (“RMB”), New Taiwan Dollar (“TWD”) and Hong Kong dollars (“HK$”), each of which is a functional currency, being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets, and liabilities of the Company’s subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the unaudited condensed consolidated statements of changes in stockholder’s equity deficit.
| 11 |
Translation of amounts from TWD and HK$ into US$ has been made at the following exchange rates as of September 30, 2024 and June 30, 2024 and for the three months ended September 30, 2024 and 2023.
| September
30, 2024 | September
30, 2023 | June
30, 2024 | ||||||||||
| Period/year-end HK$:US$ exchange rate | ||||||||||||
| Period/annual average HK$:US$ exchange rate | ||||||||||||
| Period/year-end TWD:US$ exchange rate | ||||||||||||
| Period/annual average TWD:US$ exchange rate | ||||||||||||
● Lease
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the right-of-use asset may be required for items such as prepaid or accrued lease payments. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.
In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Subsequently, the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components.
The Company made the policy election to not separate lease and non-lease components. Each lease component and the related non-lease components are accounted for together as a single component.
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of shares of common stock outstanding during the period. Diluted loss per share of common stock is computed similar to basic loss per share of common stock except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common stock equivalents had been issued and if the additional common stock were dilutive (see Note 13).
● Related parties
Parties, which can be an entity or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
| 12 |
● Concentrations and credit risk
(a) Major customers
| Percentage of Revenue | ||||||||
| Three Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| A | % | % | ||||||
| B | % | |||||||
(b) Major vendors
| Percentage of Purchases | ||||||||
| Three Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| A | % | % | ||||||
| B | % | % | ||||||
| C | % | % | ||||||
The Company’s principal financial instruments subject to potential concentration of credit risk are cash and cash equivalents, including amounts held in money market accounts. The Company places cash deposits with a federally insured financial institution. The Company maintains its cash at banks and financial institutions it considers to be of high credit quality; however, the Company’s domestic cash deposits may at times exceed the insured limit. Balances in excess of insured limitations may not be insured. The Company has not experienced losses on these accounts, and management believes that the Company is not exposed to significant risks on such accounts.
● Fair value of financial instruments
The carrying value of the Company’s financial instruments (excluding short-term bank borrowing and notes payable): cash and cash equivalents, accounts receivable, prepayments and other receivables, accounts payable, income tax payable, amount due to a related party, other payables and accrued liabilities approximates their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of notes payable approximates the carrying amount.
The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
● Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;
● Level 2 : Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and
● Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
● Value-Added Tax (“VAT”)
Sellers
and service providers are generally obligated to pay business tax for sales of goods or services within Taiwan unless the law provides
otherwise. For imported goods, the business tax will be paid by the goods receivers or buyers via customs. For imported services sold
by foreign companies to Taiwanese buyers, business tax shall be paid by the service buyers.
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VAT
is applicable to general industries, and the VAT rate is
● Recent accounting pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The amendments in ASU 2023-07 improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker (CODM). In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. ASU 2023-07 will be effective for annual reporting periods beginning after December 15, 2023, and interim periods within annual reporting periods beginning after December 15, 2024. Early adoption is permitted. The adoption of ASU 2023-01 did not have a material impact on the Company’s unaudited condensed consolidated financial statement presentation or disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires disclosures of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. This ASU will be effective for annual reporting periods beginning after December 15, 2024.
The Company’s management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, will have a material impact on the Company’s unaudited condensed consolidated financial statement presentation or disclosures.
NOTE– 3 GOING CONCERN UNCERTAINTIES
The accompanying unaudited condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
The
Company had $
The continuation of the Company as a going concern through the one-year period from the date on which this report is filed is dependent upon continued financial support from its related parties or loans or investments by third parties, increasing its sales and the diversity of its customer base. The Company is actively pursuing additional financing for its operations via potential loans and equity issuances. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain its operations.
Management has determined that the above conditions indicate that it may be probable that the Company would not be able to meet its obligations within one year after the date that this report is issued. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed consolidated financial statements contained in this report do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result if the Company is unable to continue as a going concern. To date the Company has financed its operations primarily through equity investments and loans made by related parties and their affiliates in additional to loans from commercial banks and third parties. The Company may also seek funding through public or private financings, collaborative arrangements, and other possible means of financing.
In addition, the Company will seek to expand the yacht brands the Company can offer for sale, the territories in which the Company markets its yachts and, if appropriate based on the Company’s capabilities and what the Company can offer, seek to become the exclusive distributor for yacht manufacturers in Taiwan and other territories. The Company will also seek to enter other areas related to the marine industry where the Company believes it can be profitable.
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NOTE– 4 INVENTORY
Inventory consisted of the following:
| September
30, 2024 | June
30, 2024 | |||||||
| Finished goods, mainly the parts | $ | $ | ||||||
| Total inventory | ||||||||
| Less: inventory impairment | ||||||||
| Inventory, net | $ | $ | ||||||
NOTE– 5 DEPOSIT AND PREPAYMENTS
Deposit and prepayments consisted of the following:
| September
30, 2024 | June
30, 2024 | |||||||
| Prepayments to vendors | $ | $ | ||||||
| Prepaid service fee | ||||||||
| Total deposit and prepayments | $ | $ | ||||||
Prepayments mainly consisted of prepaid expenses to vendors. The prepaid service fee consisted of prepaid OTC listing fee and annual filling fee.
In addition,
as of September, 30, 2024 and June 30, 2024, the Company has deposit and prepayments to its
related parties of $
On
and effective August 1, 2024, the board of directors (the “Board”) appointed five new directors to the Board. The
Company issued an aggregate of
shares of the Company’s common stock on September 30, 2024 with fair value of $
NOTE– 6 NOTES RECEIVABLE – BANK ACCEPTANCES
The
Company sold goods to its customers and received notes (bank acceptances) from them in lieu of payment. These bank acceptances were issued
by customers to the Company and will be honored by the applicable bank. The Company may hold a bank acceptance until maturity for full
payment or have the bank acceptance cashed by the bank at a discount at an earlier date, or transfer the bank acceptance to its vendors
in lieu of payment for its obligations. As of September
30, 2024 and June 30, 2024, the Company had notes receivable of $ and $
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NOTE– 7 PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
| September
30, 2024 | June
30, 2024 | |||||||
| Office equipment | $ | $ | ||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
Depreciation
expenses from continuing operation for the three months ended September
30, 2024, and 2023 were $
NOTE– 8 INTANGIBLE ASSETS
Intangible assets consisted of the following:
| September
30, 2024 | June
30, 2024 | |||||||
| Software | $ | $ | ||||||
| Total intangible assets | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Amortization
expense for the three months ended September 30,
2024 and 2023 were $
NOTE– 9 ACCRUED LIABILITIES AND OTHER PAYABLES
Accrued liabilities and other payables consisted of the following:
| September
30, 2024 | June
30, 2024 | |||||||
| Accrued penalty | $ | $ | ||||||
| Accrued salaries | ||||||||
| Accrued consulting fee | ||||||||
| Accrued legal fee | ||||||||
| Other payables | ||||||||
| Total accrued liabilities and other payable | $ | $ | ||||||
On
August 22, 2023, the Company was charged by the Securities and Exchange Commission with violating Rule 12b-25 by filing a Form 12b-25
“Notification of Late Filing” with respect to its Report on Form 10-Q for the quarter ended March 31, 2022, without including
sufficient detail under the circumstances presented as to why the Form 10-Q could not be timely filed. More specifically, the SEC alleged
that the delay was the result of an anticipated restatement of financial statements. Further, the Company failed to acknowledge in the
Form 12b-25 anticipated significant changes in its results of operations for the first quarter of 2022 as compared to the first quarter
of 2021 and to provide an explanation of the changes. Without admitting or denying the findings of the SEC, the Company agreed to a cease-and-desist
order that found that the Company filed one deficient Form NT and one untimely Form 8-K. In addition, the Company agreed to pay a fine
of $
The
Company recorded the $
Accrued liabilities and other payables are the expenses that will be settled in next twelve months.
| 16 |
NOTE– 10 LOAN PAYABLE
On
March 13, 2023, Vivic Taiwan entered a loan agreement with a third-party
individual. Vivic Taiwan borrowed TWD
On
May 18, 2023, Vivic Taiwan entered a loan agreement with Taiwan Hua Nan Bank. Vivic Taiwan borrowed TWD
NOTE– 11 SBA LOAN PAYABLE
As of September 30, 2024, the future minimum EIDL loan payments for the Company to be paid by year are as follows:
On
June 23, 2020, Vivic Corp. received an $
As of September 30, 2024, the future minimum EIDL loan payments for the Company to be paid by year are as follows:
| Year Ending September 30, | Amount | |||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ | |||
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NOTE– 12 STOCKHOLDERS’ EQUITY
Authorized Shares
The Company is authorized to issue shares of preferred stock and shares of common stock each with a par value of $ per share.
Preferred Stock
As
of September 30,
2024 and June 30, 2024, the Company had shares of its Series A preferred stock issued and outstanding, with a par value of $
per share, each
Common Stock
The
Company issued an aggregate of shares
of the Company’s common stock on September 30, 2024 with a fair value of $
On September 1, 2024, the Company entered an employment agreement with Mr. Hong Hsin Lai to serve as the Company’s Chief Technology Officer (“CTO”). The agreement was approved by the Board on October 8, 2024. The Company will pay Mr. Lai shares of the Company’s common stock in the first year of employment. The shares are to be paid in full within four months from September 1, 2024. If the employment agreement is renewed after one-year, the Company will pay Mr. Lai shares of the Company’s common stock each year in which he remains employed by the Company. During the three months ended September 30, 2024, the Company recorded $ stock compensation expense for shares issued to Mr. Lai.
On
September 6, 2024, the Company entered an engagement agreement with an Investor Relation (“IR”) firm, approved by the Board
on October 8, 2024. The Company will pay the IR firm $
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As of September 30, 2024 and June 30, 2024, the Company had and shares of its common stock issued and outstanding, respectively.
Basic net (loss) income per share is computed using the weighted average number of shares of common stock outstanding during the periods. The dilutive effect of potential common stock outstanding is included in diluted net (loss) income per share of common stock. The following table sets forth the computation of basic and diluted net loss per share for the three months ended September 30, 2024 and 2023:
| Three Months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net loss for basic and diluted attributable to Vivic Corp - continuing operations | $ | ( | ) | $ | ( | ) | ||
| Net income for basic and diluted attributable to Vivic Corp – discontinued operations | ||||||||
| Weighted average common stock outstanding – Basic | ||||||||
| Dilutive impact of preferred stock | ||||||||
| Weighted average common stock outstanding – Diluted | * | |||||||
| Net loss per share of common stock – basic, continuing operations | ( | ) | ( | ) | ||||
| Net loss per share of common stock – diluted, continuing operations | ( | ) | ( | ) | ||||
| Net income (loss) per share of common stock – basic, discontinued operations | ||||||||
| Net income (loss) per share of common stock –diluted, discontinued operations | $ | $ | ||||||
| * |
NOTE– 14 RELATED PARTY TRANSACTIONS
a. Related parties
| Name of Related Party | Relationship to the Company | |
| Yun-Kuang Kung | Son of Shang-Chiai Kung, who is the CEO of Vivic Corp. | |
| Kung Hwang Liu Shiang | Director and Spouse of Shang-Chiai Kung, who is the CEO of Vivic Corp. | |
| Shang-Chiai Kung | CEO of Vivic Corp. | |
| Kun-Teng Liao* | Former Secretary and Board Member | |
| Tse-Ling Wang | Director and secretary of the Company | |
| Guangdong Weiguan Ship | Yun-Kuang Kung acquired 100% ownership of this entity from Vivic Corp. in July 2023 | |
| Jiazhou Yacht Company Limited | Yun-Kuang Kung has 100% ownership of this entity |
* On October 9, 2024 Kun-Teng Liao resigned from his positions with the Company and ceased to be Secretary and a Board Member.
b. Deposit and prepayment - related party
As
of September 30, 2024 and June 30, 2024, the Company had deposits and prepayments to Weiguan of $
In
addition, on and effective August 1, 2024, the Board of Directors (the
“Board”) of the Company appointed Mr. Tse-Ling Wang, Ms. Liu-Shiang Kung Hwang, Mr. Richard Pao, Mr. Kevin Lee and Ms.
Amy Huang to the Board of Directors of the Company. Ms. Hwang, Mr. Wang and Mr. Kevin Lee will each be issued
shares of the Company’s common stock in consideration of his or her agreement to serve as a director of the Company for a
period of one-year, and each of Ms. Huang and Mr. Pao will receive
shares of the Company’s common stock in consideration of his or her agreement to serve as a director of the Company for a
period of one-year. The Board also approved the issuance of
shares of the Company’s common stock to Mr. Shang-Chiai Kung, the Chairman of the Board, in consideration of his service for a
period of one-year. The Company issued an aggregate of
shares of the Company’s common stock on September 30, 2024 with a fair value of $
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c. Due from related parties
Due from related parties consisted of the following:
| Name | September 30, 2024 | June 30, 2024 | ||||||
| Guangdong Weiguan Ship 1) | $ | $ | ||||||
| Yun-Kuang Kung 2) | ||||||||
| Total | $ | $ | ||||||
As of September 30, 2024, the due from related parties consisted of the following:
| 1) | ||
| 2) |
As
of September 30, 2024, Vivic HK owed $ |
d. Due to related parties
Due to related parties consisted of the following:
| Name | September 30, 2024 | June 30, 2024 | ||||||
| Kung Hwang Liu Shiang | $ | $ | ||||||
| Shang-Chiai Kung | ||||||||
| Total | $ | $ | ||||||
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by officers, directors, or stockholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.
Due to related parties represented temporary advances to the Company by the stockholders or senior management of the Company, which were unsecured, interest-free and had no fixed terms of repayments. Imputed interests from related parties’ loan are not significant.
Apart from the transactions and balances detailed elsewhere in these accompanying unaudited condensed consolidated financial statements, the Company has no other significant or material related party transactions during the periods presented.
NOTE– 15 COMMITMENTS AND CONTINGENCIES
As of September 30, 2024 and June 30, 2024, the Company has material commitments and contingencies.
NOTE– 16 SUBSEQUENT EVENTS
The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the unaudited condensed consolidated financial statements were issued and determined the Company did not have any major subsequent event that needs to be disclosed.
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ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
FORWARD-LOOKING STATEMENTS
Statements made in this Report that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act “) and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s commercially reasonable judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Overview
We are a global yacht sales and service provider based in Taiwan focused on offering yachts, ancillary products, technical support, service solutions and systematic management solutions to yacht marinas, yacht clubs, yacht operators and marine tourism providers. Our mission is to offer our clients, which we refer to as yacht operators, more profitable products and comprehensive service solutions. We differentiate ourselves from other yacht manufacturers by offering yachts specifically designed for marine tourism, group tours, business meetings, yacht clubs and fractional ownership as opposed to individual owners. In addition to our products, we seek to support our customers by providing maintenance and other yacht management services, yacht activity scenarios, business solutions and marketing strategies to enhance yacht tourism and operational efficiencies to enable them to grow their businesses and improve their bottom lines.
We design and offer various yachts models which differ in their sizes, performance, and functions and are sold under our brand name, “VIVIC.” Our yachts are designed to be more suitable for multiple user group scenarios, emphasizing open deck and cabin space suitable for group tours and business meetings, with improved operational economies and energy efficiencies. We collaborate with our marketing agents, encouraging them to develop yacht marinas and seek out yacht operators interested in developing their own businesses based upon yacht sharing.
Our yachts are manufactured by third parties selected by us on the basis of their production capabilities, technical ability and financial wherewithal. Once a customer places an order, we negotiate and sign an original equipment manufacturer (“OEM”) contract with a selected local manufacturer. Upon completion, we deliver the boat to the location designated by our customer. Our principal supplier and distributor in mainland China is Guangdong Weiguan Ship Technology Co., Ltd., which utilizes the mainland’s production and supply chain advantages to provide us with yacht production, delivery, and after-sales services based on our designs. Guangdong Weiguan is responsible for providing the required products and after-sales services for all sales orders in mainland China and remits 15% of the order amount of each yacht to us as a “VIVIC” brand usage fee.
In addition to our own yachts, we are the exclusive distributor of Monte Fino yachts in the People’s Republic of China, the Philippines and the Middle East pursuant to our agreement with Kha Shing Enterprise Co., Ltd. (Taiwan) (“Kha Shing”). While seeking to develop the market for sales to tour operators, we will also seek to increase sales of Monte Fino luxury yachts in the territories where we are the exclusive distributor, particularly in the 40- to 70-foot range, which are generally purchased by individual private yacht owners.
| 21 |
As our Company grows, we will seek to expand the yacht brands we offer for sale, the territories in which we market yachts and, if appropriate based on our capabilities and what we can offer, seek to become the exclusive distributor for yacht manufacturers in Taiwan and other territories. We will also seek to enter other areas related to the marine industry where we believe we can be profitable
Results of Operations
In 2023, we determined to focus our efforts on yacht sales in Taiwan and other selected regions throughout the world, and since that time have disposed of all of our business operations in mainland China. On July 12, 2023, our subsidiary, Vivic Corporation (Hong Kong) Co. Limited (“Vivic Hong Kong”), entered into a Stock Purchase Agreement with Yun-Kuang Kung pursuant to which Mr. Kung acquired all of the shares of our wholly-owned subsidiary, Guangdong Weiguan Ship Tech Co., Ltd. (“Weiguan Ship”). The divestiture of Weiguan Ship completed our plan to divest of all activities other than our ongoing yacht business in Taiwan.
Our unaudited condensed consolidated financial statements contained in this report have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
As a result of the sale of our interest in Weiguan Ship and its subsidiaries, the assets and related liabilities and the results of operations of such entities are included our financial statements as discontinued operations. The following table sets forth the results of our operations for the periods indicated as a percentage of net sales. Certain columns may not add due to rounding.
Comparison of results of operations for the three months ended September 30, 2024, and 2023
| 2024 | % of sales | 2023 | % of sales | Dollar Increase (Decrease) | Percent Increase (Decrease) | |||||||||||||||||||
| Revenue-related party, net | $ | 44,243 | - | % | $ | 791,043 | - | % | $ | (746,800 | ) | (94.41 | )% | |||||||||||
| Cost of revenue | 128,584 | 290.63 | % | 699,217 | 88.39 | % | (570,633 | ) | (81.61 | )% | ||||||||||||||
| Gross profit | (84,341 | ) | (190.63 | )% | 91,826 | 11.61 | % | (176,167 | ) | (191.85 | )% | |||||||||||||
| General and administrative expenses | 159,162 | 359.75 | % | 105,234 | 13.30 | % | 53,928 | 51.25 | % | |||||||||||||||
| Stock based compensation | 332,592 | 751.74 | % | - | - | % | 332,592 | 100 | % | |||||||||||||||
| Total operating expenses | 491,754 | 1111.48 | % | 105,234 | 13.30 | % | 386,520 | 367.30 | % | |||||||||||||||
| Loss from operations | (576,095 | ) | (1302.12 | )% | (13,408 | ) | (1.69 | )% | (562,687 | ) | 4196.65 | % | ||||||||||||
| Other expenses, net | (8,413 | ) | (19.02 | )% | (6,652 | ) | (0.84 | )% | (1,761 | ) | 26.47 | % | ||||||||||||
| Loss before income taxes | (584,508 | ) | (1321.13 | )% | (20,060 | ) | (2.54 | )% | (564,448 | ) | 2813.80 | % | ||||||||||||
| Income tax expense | - | - | % | - | - | % | - | - | % | |||||||||||||||
| Net loss from continuing operations | (584,508 | ) | (1321.13 | )% | (20,060 | ) | (2.54 | )% | (564,448 | ) | 2813.80 | % | ||||||||||||
| Net income from discontinued operations | - | - | % | 1,859,207 | 235.03 | % | (1,859,207 | ) | (100 | )% | ||||||||||||||
| Net income (loss) attributable to Vivic Corp. | (584,508 | ) | (1321.13 | )% | 1,839,147 | 232.50 | % | (2,423,655 | ) | (131.78 | )% | |||||||||||||
Revenue
Revenue was $44,243 for the three months ended September 30, 2024. Revenue from continuing operations was $791,043 for the three months ended September 30, 2023. The revenue for the three months ended September 30, 2024 was mainly from the sale of yacht models to one of the Company’s directors.
| 22 |
Cost of revenue
Cost of revenue from continuing operations was $128,584 for the three months ended September 30, 2024. Cost of revenue from continuing operations was $699,217 for the three months ended September 30, 2023. The cost of revenues in three months ended September 30, 2024 was mainly due to costs associated with yacht model sales. We sold 100 yacht models to one of the Company’s directors below cost. We considered this as marketing and advertising because the director will give our yacht models to prospective purchasers to promote and market our yachts.
Gross profit (loss)
Gross profit for the three months ended September 30, 2024, was a loss of $84,341 as we had no sales other than yacht models. Gross profit from continuing operations was $91,826 for the three months ended September 30, 2023. The gross loss in the three months ended September 30, 2024, was all the result of our decision to sell yacht models below cost for marketing purposes, while gross profit in the three months ended September 30, 2023, was the result of yacht sales.
Operating expenses
Selling expenses consisted mainly of advertising, employee salaries and welfare, entertainment, and transportation expenses of the marketing department. Selling expenses were $nil for three months ended September 30, 2024, compared to $nil for the three months ended September 30, 2023.
General and administrative expenses consisted mainly of employee salaries and welfare, and expenses for business meeting, utilities, accounting, consulting, and legal services. General and administrative expenses were $159,162 for the three months ended September 30, 2024, compared to $105,234 for the three months ended September 30, 2023, an increase of $53,928 or 51.25%. The increase of G&A expenses mainly reflected increased payroll expense of approximately $15,200, increased professional fees of approximately $36,500, and increased OTC listing fees of approximately $3,900.
In addition, on and effective August 1, 2024, the board of directors (the “Board”) appointed Mr. Tse-Ling Wang, Ms. Liu-Shiang Kung Hwang, Mr. Richard Pao, Mr. Kevin Lee and Ms. Amy Huang to the Board of Directors of the Company. Ms. Hwang, Mr. Wang and Mr. Kevin Lee were each issued 150,000 shares of the Company’s common stock in consideration of his or her agreement to serve as a director of the Company for a period of one-year, and each of Ms. Huang and Mr. Pao received 50,000 shares of the Company’s common stock in consideration of his or her agreement to serve as a director of the Company for a period of one-year. We also issued 150,000 shares of the Company’s common stock to Mr. Shang-Chiai Kung, the Chairman of the Board, in consideration of his service for a period of one-year. The 700,000 shares of the Company’s common stock were issued on September 30, 2024 with fair value of $1,932,000. During the three months ended September 30, 2024, the Company recorded $322,000 of stock compensation expense.
On September 1, 2024, the Company entered an employment agreement with Mr. Hong Hsin Lai who will serve as the Company’s Chief Technology Officer (“CTO”). The Company will issue Mr. Lai 50,000 shares of the Company’s common stock for the first year of his employment. The shares are to be paid in full within four months from September 1, 2024. If Mr. Lai’s employment continues beyond September 1, 2025, the Company will grant Mr. Lai 20,000 shares of the Company’s common stock each year. During the three months ended September 30, 2024, the Company recorded $8,542 stock compensation expense for Mr. Lai’s services.
On September 6, 2024, the Company entered an engagement agreement with an Investor Relation (“IR”) firm. The Company will pay the IR firm $500 cash per month and 1,000 shares of the Company’s common stock per month, to be paid quarterly. During the three months ended September 30, 2024, the Company recorded $2,050 stock compensation expense in respect of this arrangement.
Other income (expenses), net
Net other expenses were $8,413 for the three months ended September 30, 2024, and $6,652 for the three months ended September 30, 2023. For the three months ended September 30, 2024, net other expenses mainly consisted of interest expense of $7,958, and other expenses of $455. For the period ended September 30, 2023, net other expenses mainly consisted of interest expense of $6,271 and miscellaneous expenses of $381.
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Net (income) loss from continuing operations
We had a net loss from continuing operations of $584,508 for the three months ended September 30, 2024, compared to a net loss of $20,060 for the three months ended September 30, 2023, an increase in our loss of $564,448. The increase in our net loss from continuing operations was mainly due to the decrease in our revenue and increased G&A expenses as described above.
LIQUIDITY AND GOING CONCERN
We had $213,259 of cash and cash equivalents and working capital of $4,039,077 as of September 30, 2024, and generated a net loss of $584,508 during the three months ended September 30, 2024. Of the assets included in working capital, approximately $2,500,000 was amounts due from related parties The following is a summary of cash provided by or used in each of the indicated types of activities during the three months ended September 30, 2024 and 2023.
| 2024 | 2023 | |||||||
| Net cash used in operating activities | $ | (129,776 | ) | $ | (381,561 | ) | ||
| Net cash used in investing activities | - | - | ||||||
| Net cash provided by (used in) financing activities | $ | 31,395 | $ | (330,692 | ) | |||
Net cash used in operating activities
Net cash used in operating activities was $129, 776 for the three months ended September 30, 2024, compared to net cash used in operating activities of $381,561 for the three months ended September 30, 2023. The decrease in the use of cash outflow in operating activities was principally attributable to an increase in collection of accounts receivable from related parties by $1,226,980, 2) payments made on notes receivable by $160,504, and 3) a decrease in deferred revenue by $723,667, which was partly offset by 4) decreased cash inflow from inventory by $682,982, 5) increased payment on accounts payable – related party by $903,728, and increased net loss by $231,869 (which was the net loss after adjustments to reconcile net loss to net cash used in operating activities by $2,191,786).
Net cash used in investing activities
There was no cash provided by or used in investing activities for the three months ended September 30, 2024 and 2023.
Net cash provided by (used in) financing activities
Net cash provided by financing activities was $31,395 for the three months ended September 30, 2024, compared to net cash used in financing activities of $330,692 for the three months ended September 30, 2023. Net cash provided by financing activities for the three months ended September 30, 2024, consisted of proceeds from related party advances of $77,426, which was partly offset by payments to related parties of $46,031. Net cash used in financing activities for the three months ended September 30, 2023, consisted of payments to related parties of $739,861, which was partly offset by proceeds from related party advances of $409,169.
Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
The Company had $213,259 of cash and cash equivalents and working capital of approximately $4.0 million as of September 30, 2024, which included amounts due from related parties of $2.5 million. The Company generated a net loss of $0.6 million during the three months ended September 30, 2024, and the Company had an accumulated deficit of approximately $2.9 million as of September 30, 2024, and generated negative cash flow from operating activities during the period of $129,776. The Company does not have sustained and stable income, and there is also significant uncertainty in regarding its income for the next 12 months.
| 24 |
The continuation of the Company as a going concern through the one-year anniversary of the date of this filing is dependent upon continued financial support from its related parties and loans or investments from third parties. The Company is actively pursuing additional financing for its operations through loans and the sale of equity. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain its operations.
Management has determined that the above conditions indicate that it may be probable that the Company would not be able to meet its obligations within one year after the date of issuance of this report. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed consolidated financial statements included in this report do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a combination of our existing funds, cash generated from operations, loans from and further issuances of securities to, our principal shareholders. Our working capital requirements are expected to increase in line with the growth of our business.
Existing working capital, further advances and the issuance of debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements apart from amounts outstanding under our SBA Loan and our loan with Taiwan Hua Nan Bank. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments to our principal shareholders. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with our business and (ii) marketing expenses. We intend to finance these expenses with further issuances of equity securities and debt instruments. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current stockholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available on acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
MATERIAL COMMITMENTS
As of the date of this report, we do not have any material commitments.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions which affect the reported the amounts of assets, liabilities, revenue, costs and expenses and related disclosures. Accounting policies are critical and necessary to account for the material estimates and assumptions on our unaudited condensed consolidated financial statements. For further information on all of our significant accounting policies, see the “Notes to unaudited condensed Consolidated Financial Statements” of this Report.
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● Revenue recognition
In accordance with ASC Topic 606, “Revenue from Contracts with Customers”, the Company recognizes revenues when goods or services are transferred to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. In determining when and how revenues are recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations, and (v) recognition of revenues when (or as) the Company satisfies each performance obligation. The Company derives revenues from the processing, distribution, and sale of its products.
● Credit losses
On January1, 2023, the Company adopted Accounting Standards Update 2016-13 “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The adoption of the credit loss accounting standard has no material impact on the Company’s unaudited condensed consolidated financial statements as of January 1, 2023.
The Company’s account receivables and other receivables in the balance sheet are within the scope of ASC Topic 326. As the Company has limited customers and debtors, the Company uses the loss-rate method to evaluates the expected credit losses on an individual basis. When establishing the loss rate, the Company makes the assessment on various factors, including historical experience, credit-worthiness of customers and debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from the customers and debtors. The Company also provides specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.
Expected credit losses are recorded as allowance for credit losses on the unaudited condensed consolidated statements of operations. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. In the event the Company recovers amount that is previously reserved for, the Company will reduce the specific allowance for credit losses.
● Accounts receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest and are due within contractual payment terms, generally 30 to 90 days from completion of service. Credit is extended based on an evaluation of a customer’s financial condition, the customer’s credit-worthiness and payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. Under the current expected credit loss model, at the end of each period, the Company specifically evaluates each individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company considers the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For receivables that are past due or not being paid according to payment terms, appropriate actions are taken to collect the amounts due, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all reasonable means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of June 30, 2024 and 2023, the Company had no allowance for doubtful accounts.
● Income taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
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ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
The Company is subject to tax in local and foreign jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax authorities.
● Related parties
Parties, which can be an entity or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
● Recent accounting pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The amendments in ASU 2023-07 improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker (CODM). In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. ASU 2023-07 will be effective for annual reporting periods beginning after December 15, 2023, and interim periods within annual reporting periods beginning after December 15, 2024. Early adoption is permitted. The adoption of ASU 2023-01 did not have a material impact on the Company’s unaudited condensed consolidated financial statement presentation or disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires disclosures of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. This ASU will be effective for annual reporting periods beginning after December 15, 2024.
The Company’s management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, will have a material impact on the Company’s financial statement presentation or disclosures.
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Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Management of our Company is responsible for maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. In addition, the disclosure controls and procedures must ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial and other required disclosures.
An evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Exchange Act) at September 30, 2024 was carried out under the supervision and with the participation of our Chief Executive Officer who also is our Chief Financial Officer. Based on his evaluation of our disclosure controls and procedures, he concluded that at September 30, 2024, such disclosure controls and procedures were not effective. This was due to our limited resources, including the absence of a financial staff with accounting and financial expertise and deficiencies in the design or operation of our internal control over financial reporting that adversely affected our disclosure controls and that may be considered to be “material weaknesses.”
We plan to designate individuals responsible for identifying reportable developments and to implement procedures designed to remediate the material weakness by focusing additional attention and resources in our internal accounting functions at such time as such actions can be properly supported by the financial results of our operations. However, there is no assurance as to when we will undertake to hire the personnel and implement the procedures necessary to remediate the material weaknesses in our disclosure controls and procedures and the material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Changes in Internal Control over Financial Reporting
There have not been any changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter which is the subject of this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently party to any material legal or administrative proceedings and are not aware of any claim which might lead to a material legal claim or proceeding being commenced us in the foreseeable future.
Item 1A. Risk Factors
Reference is made to the risks and uncertainties disclosed in Item 1A (“Risk Factors”) of our Annual Report on Form 10-K for the year ended June 30, 2024 (the “2024 Form 10-K”), which are incorporated by reference into this report. Prospective investors are encouraged to consider the risks described in the 2024 Form 10-K, Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report and other information publicly disclosed or contained in documents we file with the Securities and Exchange Commission before purchasing our securities.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the quarter ended September 30, 2024, we did not have any sales of equity securities in transactions that were not registered under the Securities Act of 1933, as amended, that have not been previously reported in a report filed pursuant to the Exchange Act.
Item 3. Defaults Upon Senior Securities
None.
Item 5. Other Information
During the quarter ended September 30, 2024, none of our directors or officers
(as defined in Rule 16a-1(f) promulgated under the Exchange Act
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Item 6. Exhibits
*Filed herewith
**Furnished herewith
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SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VIVIC, CORP. | ||
| Dated: November 14, 2024 | By: | /s/ Shang-Chai Kung |
| Shang-Chai Kung | ||
| President and Chief Executive Officer | ||
(Principal Executive Officer and Principal Accounting Officer) | ||
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