VIVIC CORP
For the period ended Jun 30, 2024. Filed Oct 23, 2024.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Oct 23, 2024
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-16.
0001493152-24-014695
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2024-06-30; filed 2024-10-23.
0001493152-24-042140
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 53 previous paragraphs and 64 current paragraphs.
25 unchanged; 14 reworded; 25 added; 14 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
Revenue from continuing operations was $5,950,692 for the year ended June 30, 2024. We did not generate revenues from continuing operations in the year ended June 30, 2023. The revenue from continuing operations for the year ended June 30, 2024 reflected sales of yachts. In 2023, we determined to focus our efforts on yacht sales in Taiwan and other selected regions throughout the world.
Current report
Cost of revenue from continuing operations was $4,152,372 for the year ended June 30, 2024. We did not generate revenues from continuing operations in year ended June 30, 2023 and thus had no cost of revenues in the period. The cost of revenues in the year ended June 30, 2024 was mainly due to costs associated with yacht sales.
Current report
Gross profit from continuing operations was $1,798,320 for the year ended June 30, 2024. We had no gross profits from continuing operations for the year ended June 30, 2023. The gross profit in the year ended June 30, 2024 is all the result of yacht sales.
Current report
Selling expenses consisted mainly of advertising, employee salaries and welfare, entertainment, and transportation expenses of the marketing department. Selling expenses were $127,708 for the year ended June 30, 2024, compared to $nil for the year ended June 30, 2023.
Current report
General and administrative expenses consisted mainly of employee salaries and welfare, and business meeting, utilities, accounting, consulting, and legal expenses. General and administrative expenses were $513,411 for the year ended June 30, 2024, compared to $280,483 for the year ended June 30, 2023, an increase of $232,928 or 83.05% resulting from our increased operations and sales activities. The increase of G&A expenses mainly included increased payroll expense of $18,427, increased professional fees of $111,655, increased travel expenses of $11,204, increased meal and entertainment expenses of $15,587, increased subcontract labor of $61,904, increased OTC Listing fee of $4,290, and increased other expenses of $10,440.
Current report
Other income (expenses), net
Current report
Net other expenses was $22,015 for the year ended June 30, 2024, and $38,366 for the year ended June 30, 2023. For the year ended June 30, 2024, net other expenses mainly consisted of interest expense of $23,683, which was partly offset by other income of $1,632. For the year ended June 30, 2023, net other expenses mainly consisted of miscellaneous expenses of $29,050, and interest expense of $9,316.
Current report
We had net income from continuing operations of $980,951 for the year ended June 30, 2024, compared to a net loss of $318,849 for the year ended June 30, 2023, an increase of $1,299,800 or 407.65%. The increase in net income from continuing operations was mainly due to the gross profit generated through yacht sales which was partly offset by increased G&A expenses.
Current report
Net cash used in operating activities from continuing operations was $261,488 for the year ended June 30, 2024, compared to net cash provided by operating activities from continuing operations of $313,226 for the year ended June 30, 2023. Net cash used in discontinued operations was $1,239,304 for the year ended June 30, 2023. The decrease in cash inflow from operating activities from continuing operations was principally attributable to 1) an increase in accounts receivable – related parties by $1,242,690, 2) an increase in deferred revenue by $4,636,568, and 3) an increase in note receivables by $162,831, which was partly offset by 1) an increase in deposits and prepayments by $1,406,927, 2) an increase in inventory by $1,637,113, 3) an increase in accounts payable of $979,007, and 4) an increase in tax payables by $140,957, as well as increased net income by $1,299,800.
Current report
There was no cash provided by or used in investing activities for continuing operations for the year ended June 30, 2024 and 2023. Cash used in investing activities for discontinued operations was $180,787 for the year ended June 30, 2023.
Current report
● Credit losses
Current report
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 consolidated financial statements as of January 1, 2023.
Current report
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.
Current report
Expected credit losses are recorded as allowance for credit losses on the 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.
Current report
● Accounts receivable
Current report
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.
Current report
● Income taxes
Current report
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.
Current report
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.
Current report
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.
Current report
● Related parties
Current report
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.
Current report
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 consolidated financial statement presentation or disclosures.
Current report
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.
Current report
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.
Removed paragraphs (14)
Previous report
Revenue from continuing operations was $1,600,942 for the year ended December 31, 2023 (“Fiscal 2023”), representing an increase of $1,600,942 from the year ended December 31, 2022 (“Fiscal 2022”), in which there was no revenue. The increase was mainly due to the inception of sales of yacht at our Taiwan branch.
Previous report
Cost of revenue from continuing operations was $1,388,728 for Fiscal 2023, an increase of $1,388,728 from Fiscal 2022, in which there were no revenues or cost of revenues. The increase was mainly due to the inception of sales at our Taiwan branch.
Previous report
Gross profit from continuing operations was $212,214 for Fiscal 2023, an increase of $212,214, from gross profit for Fiscal 2022, when there were no sales.
Previous report
General and administrative expenses from continuing operations were $395,324 for Fiscal 2023, compared to $216,009 for Fiscal 2022, an increase of $179,315 or 83.01%. The increase was mainly due to an increase in staffing fees by $146,315, an increase in professional expenses by $107,242, increased management service fees by $60,000, increased meal and entertainment expense by $13,127, increased annual filing fee by $6,016, increased retirement fee by $1,114, increased travel expense by $4,887 and increased other expenses by $32,252, which were partly offset by decreased consulting expenses of $170,990, and decreased payroll expense of $20,343.
Previous report
Other expenses, net
Previous report
Net other expense from continuing operations was $56,719 for Fiscal 2023, and $10,265 for Fiscal 2022, respectively. For Fiscal 2023, the net other expense mainly consisted of interest expense of $18,271, and other expenses of $38,448. For Fiscal 2022, the net other expense mainly consisted of interest expense of $7,761, and other expense of $2,504.
Previous report
Net loss from continuing operations
Previous report
We had a net loss from continuing operations of $241,360 for Fiscal 2023, compared to $226,283 for Fiscal 2022, an increase of $15,077 or 6.66%, for the reasons explained above.
Previous report
We had net income from discontinued operations of $1,746,302 for Fiscal 2023, compared to net loss of 755,269 for Fiscal 2022. During Fiscal 2023, we had a gain on disposal of Weiguan Ship of $1,859,207, and a $112,905 loss from the operations of Weiguan Ship, up to the date of disposal.
Previous report
Net cash from continuing operations used in or provided by operating activities
Previous report
Net cash from continuing operations used in or provided by investing activities
Previous report
● Net loss per share
Previous report
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted income per share is computed similar to basic income per share 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 shares were dilutive.
Previous report
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its CFS and related disclosures.
Reworded paragraphs (14)
Previous wording
We are the exclusive distributor of Monte-Fino yachts in Asia and the Middle East pursuant to our agreement with Kha Shing Enterprise Co. We also distribute Monte Fino yachts in other territories throughout the world other than those, such as the United States, where Kha Shing has granted another company exclusive distribution rights. Our employees located in Taiwan engage in the design, construction, on an outsourced basis, and distribution of power boats, charter boats and eco-friendly new energy boats. In cooperation with Kha Shing we design and offer various yachts models which differ in their sizes, performances, and functions. Currently, we own our own brand name, “VIVIC.”
Current wording
We are the exclusive distributor of Monte-Fino yachts in Asia and the Middle East pursuant to our agreement with Kha Shing Enterprise Co. We also distribute Monte Fino yachts in other territories throughout the world other than those where Kha Shing has granted another company exclusive distribution rights. Our employees located in Taiwan engage in the design, construction, on an outsourced basis, and distribution of power boats, charter boats and eco-friendly new energy boats. In cooperation with Kha Shing, we design and offer various yachts models which differ in their sizes, performances, and functions. Currently, we own our own brand name, “VIVIC.”
Previous wording
As our company grows, we will seek to expand the yacht brands we offer for sale, the territories in which we market our 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.
Current wording
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
Previous wording
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 indirectly wholly-owned subsidiary, Guangdong Weiguan Ship Tech Co., Ltd. (“Weiguan Ship”). In consideration for our interest in Weiguan Ship, we received RMB 1,000 ($137) and the agreement of Mr. Kung to indemnify us and our affiliates against any and all claims, including unknown claims and claims for taxes, related to the business of Weiguan Ship whether arising before or after the date of the Stock Purchase Agreement The divestiture of Weiguan Ship completed our plan to divest of all activities other than our ongoing yacht business in Taiwan.
Current wording
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”). In consideration for our interest in Weiguan Ship, we received RMB 1,000 ($137) and the agreement of Mr. Kung to indemnify us and our affiliates against any and all claims, including unknown claims and claims for taxes, related to the business of Weiguan Ship whether arising before or after the date of the Stock Purchase Agreement. The divestiture of Weiguan Ship completed our plan to divest of all activities other than our ongoing yacht business in Taiwan.
Previous wording
Comparison of continuing operations for the years ended December 31, 2023 and 2022
Current wording
Comparison of results of operations for the years ended June 30, 2024, and 2023
Previous wording
Net income (loss) from discontinued operations
Current wording
Net (income) loss from continuing operations
Previous wording
We had $72,907 of cash and cash equivalents and working capital of $2,190,652 as of December 31, 2023, and incurred a net loss from continuing operations of $241,360 during the year ended December 31, 2023, respectively. Our working capital as of December 31, 2023, includes a related party receivable of $ 2,586,218. The following is a summary of cash provided by or used in each of the indicated types of activities during the years ended December 31, 2023, and 2022.
Current wording
We had $310,859 of cash and cash equivalents and working capital of $3,201,865 as of June 30, 2024, and generated net income from continuing operations of $980,951 during the year ended June 30, 2024. The following is a summary of cash provided by or used in each of the indicated types of activities during the years ended June 30, 2024 and 2023.
Previous wording
The net cash provided by operating activities from continuing operations was $27,623 for Fiscal 2023, compared to net cash used in operating activities from continuing operations of $246,512 for Fiscal 2022. The decrease in cash outflow from operating activities was principally attributable to an increase in cash inflow from deferred revenue by $270,715, which was mainly customer deposits for sales orders received in our Taiwan branch, an increase in cash inflow from accrued liabilities and other payables by $144,493, an increase in cash inflow from tax payables by $38,134, and decreased cash outflow on other receivables of $18,121, which was partly offset by increased cash outflows from accounts receivables by $175,827, increased cash outflow from deposit and prepayments by $3,232 and increased net loss from continue operation by $15,077.
Current wording
Net cash provided by (used in) operating activities
Previous wording
Net cash provided by investing activities for continuing operations was $nil for Fiscal 2023, compared to net cash used in investing activities for continuing operations of $7,485 for Fiscal 2022. The net cash used in investing activities for continuing operations for Fiscal 2022, consisted of the purchase of intangible assets for $7,485.
Current wording
Net cash used in investing activities
Previous wording
Net cash from continuing operations provided by or used in financing activities
Current wording
Net cash provided by (used in) financing activities
Previous wording
The net cash used in financing activities from continuing operations was $25,163 for Fiscal 2023, compared to net cash provided by financing activities from continuing operations of $207,371 for Fiscal 2022. The net cash used in financing activities from continuing operations for Fiscal 2023, consisted of proceeds from loans of $545,703, partly offset by changes in amounts due to related parties of $570,866. The net cash provided by financing activities from continuing operations for Fiscal 2022, consisted of proceeds from issuance of shares of $50,000, and proceeds from amounts due to related parties of $157,371.
Current wording
Net cash used in financing activities for continuing operations was $304,080 for the year ended June 30, 2024, compared to net cash provided by financing activities for continuing operations of $496,040 for the year ended June 30, 2023. Net cash provided by financing activities for discontinued operations was $1,453,069 for the year ended June 30, 2023. Net cash used in financing activities for continuing operations for the year ended June 30, 2024, consisted of repayments to related parties of $352,329 which was partly offset by proceeds from related parties of $48,249. Net cash provided by financing activities for continuing operations for the year ended June 30, 2023, consisted of proceeds from loans of $553,586, and proceeds from advances from related parties of $63,336, which was partly offset by repayment to related parties of $120,882.
Previous wording
The Company had $72,907 of cash and cash equivalents available for the Company’s continuing operations and working capital of $2,190,652 as of December 31, 2023, which included a receivable due from a related party in the amount of $2,586, 218, and incurred a net loss of $241,360 from continuing operations during the year ended December 31, 2023. The Company had an accumulated deficit of approximately $3.3 million as of December 31, 2023.
Current wording
The Company had $310,859 of cash and cash equivalents and working capital of approximately $3.2 million as of June 30, 2024, which included accounts receivable from a related party -Weiguan Ship of $0.02 million, accounts receivable from a related party - Jiazhou Yacht of $1.2 million, and amounts due from related parties of $2.5 million, and the Company generated net income of $2.9 million (including $1.87 million gain on disposal of Weiguan ship) during the year ended June 30, 2024. However, the Company had an accumulated deficit of approximately $2.3 million as of June 30, 2024.
Previous wording
The continuation of the Company as a going concern through the one-year anniversary of the date of this filing is dependent upon the 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.
Current wording
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.
Previous wording
We expect that working capital requirements will continue to be funded through a combination of our existing funds, the receipt of amounts due from related parties 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.
Current wording
We expect that working capital requirements will continue to be funded through a combination of our existing funds, cash generated from operations 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.
Previous wording
Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next twelve 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 upon 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.
Current wording
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.