VIVIC CORP

Beginning with a change in our management resulting from a change in control of our Company which occurred at the end of 2018, we have 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. In 2022 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.

We are the exclusive distributor of Monte Fino yachts in Asia and the Middle East pursuant to our agreement with Kha Shing Enterprise Co. (“Kha Shing”). 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”

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.

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. Our technical staff closely monitors the progress of construction. Upon completion, we deliver the boat to the location designated by our customer.

Our Market

Taiwan has had a robust yacht manufacturing industry since the 1950s and yachts designed and manufactured in Taiwan are distributed throughout the world. The Taiwanese yacht building industry underwent a period of decline in the 1990s. From 2000 to 2011, Taiwan’s yacht manufacturers sought to expand the market by entering into strategic alliances, focusing on designing and engineering, and improving their infrastructure and manufacturing capabilities. In addition to expanding the market, this facilitated the development of the mega yacht and the customization of yachts to offer more amenities. There was also a shift toward more modern, lighter components including fiberglass hulls and decks. Today, yachts typically range from 38 feet to 150 feet, and a large portion of the market is for luxury yachts from 60 feet to 80 feet.

More recently, in response to stricter environmental regulations imposed by the Taiwanese regulators and governments throughout the world and the demand for more eco-friendly yachts, the yachting industry in general, and our management in conjunction with Kha Shing, have sought to develop alternatives to the traditional diesel engine. These have included more fuel efficient, cleaner diesel engines, electric and liquified natural gas yachts. While the market for all-electric boats and yachts may be large, development of these vehicles is an ongoing, highly competitive process, and there remain questions as to what the consumer will demand and accept. Despite the challenges faced in developing electric yachts, in a 2024 study, “Global Electric Boats, Small Submarines and Autonomous Underwater Vehicles (AUV) 2015-2024 – Forecasts, Players, Opportunities,” the international market research company, Research and Markets, projected that the electric water craft market will increase from $2.6 billion in 2013 to $7.3 billion in 2024.

Our current primary goal is to become a leading distributor of charter boats globally and thereafter, expand into other areas of high-end boating by, for example, developing a high performance all-electric yacht. This initially will require that we build upon the reputation of Monte Fino yachts, our relationship with Kha Shing and the extensive experience of our management. As we move into other areas, we will require additional personnel, in particular those with design and engineering backgrounds.

We believe the knowledge and experience of our management and our relationship with Kha Shing provides us with a sound basis upon which to grow our business and then expand into other areas related to pleasure crafts. A key to our growth will be the development of relationships with partners in Southeast Asia while maintaining the strength our of company in Taiwan.

Sales and Marketing

We are dedicated to catering to the needs of affluent yacht operators in Taiwan and Asia, who are interested in outdoor yacht recreational activities. With the increase in disposable income, more individuals are looking to participate in outdoor water sports, yacht tourism, recreational activities, and social gatherings on the water for business entertainment. This growing trend is a major driver in the high-end shipping industry. We recognize that yacht rental and ownership can be an expensive proposition, which is why we and other industry players are promoting the idea of yacht sharing and luxury yacht charters. Our standardized and rapid production, coupled with their operating efficiencies of our yachts, enables cooperative yacht operators to achieve a better return on investment through more economical use and maintenance of their yachts. This allows multiple families to enjoy a cruise or yacht rental in a shorter time frame.

Not all yacht customers desire the same type of yacht or the same features. There is great divergence among the features customers want. Customers in certain markets focus on the size and speed of the craft, while others focus on high-end accessories. The needs of the short-distance day cruiser are much different than those partaking in long overnight cruises or who choose to spend more time on their yachts even when harbored in a marina. Our ability to offer each consumer a yacht designed to his needs and specifications is one of our strengths.

We market our yachts by participating in boat shows, through a strong channel of agents and operators in various regions. Advantages of the yachts we design include Ease of land transportation reducing logistics costs, standardized designs to facilitate mass production, the use of catamarans as the main hull design to save fuel and provide a large deck for activities, high-end interior decoration and cutting-edge features, eliminating any unnecessary functions and decorations to optimize cost savings and expedite the recycling process. and the ability to convert the hull for use on a diesel engine or a renewable energy craft.

Dedicated Customer Support Team

Our marketing effort does not stop when the customer purchases one of our yachts. After sale activities intended to maintain a positive relationship include follow up calls, review requests, and reminders for scheduled maintenance and maintenance items. We have a dedicated staff of full-time employees including trained technicians to assist with any required maintenance or repair issues that may arise.

Product Warranties

We provide limited warranty coverage for defects in materials and workmanship in our yachts. In addition, we endeavor to ensure that the manufacturers of the engines incorporated into our yachts provide all our customers with warranty and service programs. We offer a two-year warranty on the hulls of our yachts.

Financing Arrangements

We do not directly finance the purchase of our yachts. We do, however, have programs where we introduce our customers to lenders, who depending upon the qualifications of the customer, are willing to provide financing.

Manufacturing and Sourcing

We outsource the manufacture of our yachts to qualified producers, including Kha Shing, who are generally well known to our staff. Production of each yacht is entrusted to a facility based upon the manufacturing skills and capabilities of the facility, its economic wherewithal and the ability to meet delivery dates.

We work with each of our manufactures to ensure that they have the parts and accessories necessary and all of our accessories are sourced from select global manufacturers with which we or our manufacturers have ongoing relationships. Our in-house sourcing and logistics personnel reach out to possible vendors and suppliers and review their products and background to ensure that their products will meet our standards and that they can meet our needs on a timely basis. We review market trends with our major suppliers to determine whether there is an opportunity to upgrade or accessorize a product to increase its customer appeal, the sales price and our margins.

Orders and Backlog

Since we determined to focus on the sale of yachts, our book of business has grown. This is evidenced by the fact that we first began to generate revenues from the sale of yachts in the second half of calendar year 2023, achieving revenues of $1.6 million for calendar year 2023. We now have in-house a sufficient number of orders to achieve revenues for calendar year 2024 in excess of $10 million if we can deliver in 2024 all of the yachts for which we currently have orders. In addition, our distributor in Mainland China has received orders for three yachts and is expected to receive orders for approximately 20 yachts during 2024, which will generate more than $1.6 million in brand licensing revenues. Because orders are seasonal and subject to wide fluctuations in timing and as to the cost of the yachts ordered, period-to-period comparisons are not necessarily being meaningful, nevertheless, we do use bookings as a gauge of future nets sales.

Employees

As of September 30, 2024, we employed 14 individuals including outside sales personnel. We believe that our relationships with our employees are generally good.

Competition

The market for traditional high-end yachts is highly competitive and changes rapidly. We position yachts as operational assets and seek to assist yacht operators to use yachts in a variety of ways to meet their customers’ individual needs for water travel, entertainment spaces and for business and social interaction. We believe that this is a niche market in which we do not compete directly against most large well capitalized companies with extensive experience and well-known brand names that offer yachts for use by individuals. Generally speaking, middlemen seek to lease idle private yachts for use by others, including businesses and individuals. The needs of the customers who lease idle yachts have become more specific and are no longer satisfied by traditional high-end yachts. As a result, yacht operators require yachts with standardized configurations, greater open space, flexibles accommodations, greater energy efficiencies, lower acquisition costs and professional support. Our yachts are specifically for these operators, designed, produced and delivered, with follow on support to suit their needs, Currently, very few manufacturers target yachts for yacht operators. We believe we are one of the few yacht manufacturers seeking to serve this new and growing market. Nevertheless, there are few barriers to entry and given the enormity of the boating industry, this market will likely attract new competitors. Our success will be contingent upon our ability to offer yachts that appeal to the ultimate end user with a strong value proposition for the yacht operator.

While seeking to develop the market for sales to tour operators, we will also seek to increase sales of Monte Fino luxury yachts, particularly in the 40 to 70 foot size, the range generally purchased by private yacht owners. Many existing competitors in this market are well-established and enjoy greater resources or other strategic advantages. With the introduction of new technologies and market entrants, we expect the competitive environment to be and remain intense. Many of our current competitors enjoy greater resources, recognized brand names, wide distribution networks and more mature intellectual property portfolios than we currently have. Among our well-known competitors are Azimut and Ferretti.

Intellectual Property and Patents

We expect to rely on, trade secrets, copyrights, know-how, trademarks, license agreements, patents and contractual provisions to establish our intellectual property rights and protect our products, brands and services. These legal means, however, afford only limited protection and may not adequately protect our rights. Litigation may be necessary in the future to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others. Litigation could result in substantial costs and diversion of resources and management attention.

We rely on trade secrets and unpatentable know-how that we seek to protect, in part, by confidentiality agreements. We expect that, where applicable, we will require our employees to execute confidentiality agreements in our favor. These agreements will provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific limited circumstances. The agreements will also provide that all inventions conceived by the individual while rendering services to us shall be assigned to us as the exclusive property of our company. There can be no assurance, however, that all persons we employ will sign such agreements, or if they do, or, if they are breached, that we would have adequate remedies for any breach, or that our trade secrets or unpatentable know-how will not otherwise become known or be independently developed by competitors.

Regulations

We will be subject to numerous regulations applicable to businesses generally in Taiwan, including regulations relating to working conditions, employee compensation and the maintenance of welfare plans. Moreover, although we do not manufacture the yachts we sell, our contractors will be subject to numerous regulations related to worker safety intended to protect against occupational exposure to chemicals, including health and safety risks, and the use and disposal of various chemicals. This regulatory framework imposes compliance burdens on our contractors which we must consider when determining who to use to manufacture yachts.

The craft we sell are utilized throughout the world which requires that we design and build our yachts in a manner which will allow our customers to comply with regulations imposed on them by various jurisdictions. The use of traditional diesel engines for cruising and on-board activities produces significant waste resulting in environmental pollution. As is the case with automobiles, governments have been increasing standards related to environmental protection and it is likely they will continue to do so. For example, in 2008, The European Union and International Maritime Organization implemented new marine engine emission standards since 2008. This changing regulatory landscape imposes a significant burden on us to ensure our yachts can be used throughout the world.

Regulation of Ships in Taiwan

Since the lifting of the Taiwan Maritime Ban, Taiwan’s government has actively promoted water leisure activities. The Ministry of Communications revised “The Law of Ships” and added a special chapter for yachts (Chapter 7 of the Law of Ships), which was announced and implemented on December 8, 1999. The Port and Port Bureau of the Ministry of Communications announced on March 25th, 2002, the Ship and Ocean Industries R&D Center was to become a yacht verification agency. The ship center provides RINA-Italian ship certification services, CE certification services, MCA business yacht certification services and other certification services.

Regulations on Company Establishment

The establishment, operation and management of companies in Taiwan is governed by the Taiwan Company Act, which was latest amended on December 29, 2021. There are four types of companies in Taiwan: unlimited company, unlimited company with limited liability shareholders, limited company and company limited by shares. Unlimited company and unlimited company with limited liability shareholders are rarely used in practice; a company limited by shares is the most common form of business undertaken for foreign investors in Taiwan. The Taiwan Company Act applies to both Taiwan domestic companies and foreign-invested companies, unless otherwise provided in the relevant foreign investment laws and regulations.

Currently, we do not have any subsidiaries in Taiwan, having chosen to operate as a branch office of our Nevada company. Operating as a branch office causes us to be subject to the jurisdiction of the Taiwanese government and the local government where our facilities are located.

Foreign Investment

The principal regulations governing foreign investments in Taiwan are the Statute for Investment by Foreign Nationals, the Regulations for Verification of Investment by Overseas Chinese and Foreign Nationals, and the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals. In order to efficiently provide services and manage foreign investments, Taiwan government has established the Investment Commission under the Ministry of Economic Affairs.

All investments made by foreign nationals within the territory of Taiwan must comply with the provisions of the Statute for Investment by Foreign Nationals and receive permission from the Investment Commission. The “Negative List for Investment by Overseas Chinese and Foreign Nationals” issued by the Investment Commission sets forth a list of industries closed to foreign investment because the authorities believe such industries are material to national security and environmental protection. The restricted list generally includes public utilities, power distribution, natural gas, postal service, telecommunications, mass media, and air and sea transportation.

There is no limitation on foreign investment in companies engaged in the design, manufacture and sale of yachts.

Dividend Distribution and Fund Transfer

Except under limited circumstances, a Taiwanese company will not be permitted to distribute dividends or make other distributions to shareholders in any given year in which it did not record net income or retained earnings (excluding reserves). The Taiwan Company Act requires that 10% of annual net income (less prior years’ losses, if any, and applicable income taxes) be set aside as a legal reserve until the accumulated legal reserve equals the paid-in capital of the company. The company will be permitted to make distributions to its shareholders in cash or in the form of common shares from legal reserves if it has no accumulated loss, provided that the distribution payable out of the company’s legal reserve can only come from the amount exceeding 25% of the total paid-in capital.

Foreign Exchange

Taiwan Foreign Exchange Control Law and regulations provide that all foreign exchange transactions must be executed by banks designated by Taiwan’s Financial Supervisory Commission and the Central Bank of the Republic of China (Taiwan) to engage in such transactions. Current regulations favor trade-related or service-related foreign exchange transactions. Consequently, foreign currency earned from exports of merchandise and services may be retained and used freely by exporters, and all foreign currency needed for the importation of merchandise and services may be purchased freely from the designated foreign exchange banks.

Apart from trade-related or service-related foreign exchange transactions, Taiwan companies and individual residents reaching the age of 20 may, without foreign exchange approval, remit foreign currency of up to US$50 million (or its equivalent) and US$5 million (or its equivalent), respectively, each calendar year to and from Taiwan (or such other amount as determined by the Central Bank of the Republic of China (Taiwan) from time to time at its discretion in consideration of Taiwan’s economic and financial conditions or the needs to maintain the order of foreign exchange market in Taiwan). The limits apply to remittances involving either a conversion of NTD into a foreign currency or a conversion of foreign currency into NTD. In addition, a requirement is also imposed on all enterprises to register medium- and long-term foreign debt with the Central Bank of the Republic of China (Taiwan). Subject to specified requirements but without foreign exchange approval of the Central Bank of the Republic of China (Taiwan), foreign persons may remit to and from Taiwan foreign currencies of up to US$100,000 (or its equivalent) per remittance if the required documentation is provided to the authorities in Taiwan. The above limit applies to remittances involving either a conversion of NTD into a foreign currency or a conversion of foreign currency into NTD.