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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

 

FORM 10-Q

 

(Mark one)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 000-56198

 

VIVIC CORP.

(Exact name of registrant as specified in its charter)

 

Nevada   98-1353606

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

187 E Warm Springs Road

Las Vegas, Nevada 89119

(Address of principal executive offices)

 

702 899 0818

(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
Common Stock, $0.001 Par Value   VIVC   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.

 

Yes ☒ No ☐

 

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 ☐ No

 

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
Non-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 13, 2023, there were 26,657,921 shares of the registrant’s common stock outstanding.

 

 

 

   
 

 

VIVIC CORP.

FORM 10-Q

September 30, 2023

INDEX

 

    Page
     
Part I – Financial Information 4
     
Item 1. Unaudited Condensed Consolidated Financial Statements  
     
  Condensed Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022 4
     
  Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022 5
     
  Unaudited Condensed Consolidated Statements of Changes In Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2023 and 2022 6
     
  Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 7
     
  Notes to Unaudited Condensed Consolidated Financial Statements 8
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21
     
Item 4. Controls and Procedures 26
     
Part II – Other Information 27
     
Item 1. Legal Proceedings 27
     
Item 1A. Risk Factors 27
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27
     
Item 6. Exhibits 27
     
  Signatures 28

 

 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:

 

the “Company,” “we,” “us,” and “our” refer to Vivic Corp. (“Vivic”) 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; 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

 

   September 30, 2023   December 31, 2022 
   (Unaudited)     
ASSETS          
Current assets          
Cash and cash equivalents  $71,583   $73,998 
Deposit and prepayments   1,141,997    451,583 
Inventory   124,000    - 
Due from related party   2,821,192    - 
Other receivables   100,708    - 
Total current assets   4,259,480    525,581 
           
Non-current assets          
Property and equipment, net   1,054    1,458 
Intangible assets, net   3,764    5,822 
Total non-current assets   4,818    7,280 
           
Assets classified as held for sale   -    2,658,736 
           
TOTAL ASSETS  $4,264,298   $3,191,597 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
Current liabilities          
Accrued liabilities and other payables  $196,196    147,242 
Deferred revenue   1,506,301    576,449 
Due to related parties   345,687    273,710 
Total current liabilities   2,048,184    997,401 
           
Non-Current liabilities          
SBA loan payable   87,500    87,500 
Long term loan   527,000    - 
Total non-current liabilities   614,500    87,500 
           
Liabilities directly associated with assets classified as held for sale   -    3,142,918 
           
TOTAL LIABILITIES   2,662,684    4,227,819 
           
Commitments and contingencies   -    - 
           
STOCKHOLDERS’ EQUITY (DEFICIT)          
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 832,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022   832    832 
Common stock, $0.001 par value; 70,000,000 shares authorized; 26,657,921 and 25,546,810 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.   26,658    25,547 
Additional paid-in capital   4,845,066    3,746,177 
Accumulated other comprehensive income   943    1,068 
Accumulated deficit   (3,271,885)   (4,809,846)
Total stockholders’ equity (deficit)   1,601,614    (1,036,222)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)  $4,264,298   $3,191,597 
    -    - 

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 4 

 

 

VIVIC CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

   2023   2022   2023   2022 
  

For the Three Months

Ended September 30,

  

For the Nine Months

Ended September 30,

 
   2023   2022   2023   2022 
                 
Revenue, net  $791,043   $-   $791,043   $- 
                     
Cost of sales   699,217    -    699,217    - 
                     
Gross profit   91,826    -    91,826    - 
                     
Operating expenses                    
General and administrative expenses  $105,234   $51,092   $257,668   $107,689 
                     
Loss from operations   (13,408)   (51,092)   (165,842)   (107,689)
                     
Other income (expenses)                    
Interest expense   (6,271)   (444)   (13,197)   (7,007)
Other income (expenses)   (381)   (138)   (29,302)   (373)
Loss on loan settlement   -    -    -    (2,000)
Total other income (expenses), net   (6,652)   (582)   (42,499)   (9,380)
                     
Loss before income taxes   (20,060)   (51,674)   (208,341)   (117,069)
                     
Income tax provision   -    -    -    9 
                     
Net loss from continuing operations   (20,060)   (51,674)   (208,341)   (117,078)
                     
Income (loss) from discontinued operations   1,859,207    (236,639)   1,746,302    (679,380)
                     
Net income (loss) for the period  $1,839,147   $(288,313)  $1,537,961   $(796,458)
                     
Net loss attributable to noncontrolling interest arise from                    
Continuing operations   -    -    -    - 
Discontinued operations   -    (3,312)   -    (37,870)
                     
Total net loss attributable to noncontrolling interest  $-   $(3,312)  $-   $(37,870)
                     
Net income (loss) attributable to Vivic Corp. arising from                    
Continuing operations   (20,060)   (51,674)   (208,341)   (117,078)
Discontinued operations   1,859,207    (233,327)   1,746,302    (641,510)
                     
Total net income (loss) attributable to Vivic Corp.  $1,839,147   $(285,001)  $1,537,961   $(758,588)
                     
Other comprehensive item                    
Foreign currency translation gain (loss)   (2,997)   16,771    (125)   12,838 
                     
COMPREHENSIVE INCOME (LOSS)  $1,836,150   $(268,230)  $1,537,836   $(745,750)
                     
Weighted average common stock outstanding                    
Basic and Diluted   26,657,921    25,546,810    26,063,700    25,550,253 
                     
Net income (loss) from per share of common stock – Basic and Diluted   0.07    (0.01)   0.06    (0.03)

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 5 

 

 

VIVIC CORP.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

(UNAUDITED)

 

                                          
   Preferred stock   Common stock   Additional    Accumulated other        Total stockholders’  
   No. of shares   Amount   No. of shares   Amount   paid-in capital   comprehensive income (loss)   Accumulated loss   

equity

(deficit)

 
                                  
Balance as of December 31, 2022   832,000   $    832    25,546,810   $25,547   $3,746,177   $1,068   $(4,809,846) - $     (1,036,222)
                                          
Foreign currency translation adjustment   -    -    -    -    -    (1,146)   -     (1,146)
Net loss for the period   -    -    -    -    -    -    (332,225) -  (332,225)
                                          
Balance as of March 31, 2023   832,000    832    25,546,810    25,547    3,746,177    (78)   (5,142,071) -  (1,369,593)
                                          
Shares issued for loan settlement   -    -    1,111,111    1,111    1,098,889    -    -     1,100,000 
Foreign currency translation adjustment   -    -    -    -    -    4,018    -     4,018 
Net loss for the period   -    -    -    -    -    -    31,039  -  31,039 
                                          
Balance as of June 30, 2023   832,000    832    26,657,921    26,658    4,845,066    3,940    (5,111,032) -  (234,536)
                                          
Foreign currency translation adjustment   -    -    -    -    -    (2,997)   -     (2,997)
Net income for the period   -    -    -    -    -    -    1,839,147  -  1,839,147 
                                          
Balance at September 30, 2023   832,000   $832    26,657,921   $26,658   $4,845,066   $943   $(3,271,885) - $1,601,614 

 

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

 

                                              
   Equity attributable to VIVIC Corp. stockholders         
   Preferred stock   Common stock   Additional    Accumulated other          Total stockholders’  
   No. of shares   Amount   No. of shares   Amount   paid-in capital   comprehensive income (loss)   Accumulated loss   Noncontrolling interests   equity (deficit) 
                                     
Balance as of December 31, 2021   832,000   $832    25,556,810   $25,557   $3,821,709   $10,347   $(3,865,450)  $(90,386)  $(97,391)
                                              
Cancellation of shares   -    -    (60,000)   (60)   60    -    -    -    - 
Shares issued for loan settlement   -    -    50,000    50    51,950    -    -    -    52,000 
Foreign currency translation adjustment   -    -    -    -    -    4,185    -    -    4,185 
Net loss for the period   -    -    -    -    -    -    (175,164)   (11,249)   (186,413)
                                              
Balance as of March 31, 2022   832,000    832   25,546,810    25,547    3,873,719    14,532    (4,040,614)   (101,635)   (227,619)
                                              
Foreign currency translation adjustment   -    -    -    -    -    (8,118)   -    -    (8,118)
Net loss for the period   -    -    -    -    -    -    (298,423)   (23,309)   (321,732)
                                              
Balance as of June 30, 2022   832,000    832    25,546,810    25,547    3,873,719    6,414    (4,339,037)   (124,944)   (557,469)
                                              
Acquisition of minority equity of a subsidiary   -    -    -    -    (128,256)   -    -    128,256    - 
Foreign currency translation adjustment   -    -    -    -    -    16,771    -    -    16,771 
Net loss   -    -    -    -    -    -    (285,001)   (3,312)   (288,313)
                                              
Balance as of September 30, 2022   832,000   $832   25,546,810   $25,547   $3,745,463   $23,185   $(4,624,038)  $-   $     (829,011)

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 6 

 

 

VIVIC CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

         
  

For the Nine Months

Ended September 30,

 
   2023   2022 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss from continuing operations  $(208,341)  $(117,078)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization expenses   2,206    1,233 
Changes in operating assets and liabilities:          
Deposit and prepayments   (741,080)   (2,605)
Other receivables   (104,788)   - 
Inventory   (129,201)   - 
Deferred revenue   997,298    - 
Accrued liabilities and other payables   49,591    (36,507)
           
Net cash used in continuing operations   (134,315)   (154,957)
Net cash (used in) provided by discontinued operations   (235,558)   82,318 
           
Net cash used in operating activities   (369,873)   (72,639)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of intangible assets   -    (7,236)
Cash from discontinued operation   32,185    - 
Net cash used in continuing operations   32,185    (7,236)
Net cash (used in) provided by discontinued operations   (75,967)   65,759 
           
Net cash (used in) provided by investing activities   (43,782)   58,523 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from issuance of common and preferred stocks   -    50,000 
Due from / (to) related parties   (414,502)   50,585 
Proceeds from loans   549,100    - 
           
Net cash provided by continuing operations   134,598    100,585 
Net cash provided by (used in) discontinued operations   282,419    (161,813)
           
Net cash provided by (used in) financing activities   417,017    (61,228)
           
Effect of exchange gain (loss) on cash and cash equivalents   (5,777)   52,855 
           
NET DECREASE IN CASH & CASH EQUIVALENTS   (2,415)   (22,489)
           
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD   73,998    80,306 
           
CASH & CASH EQUIVALENTS, END OF PERIOD  $71,583   $57,817 
           
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS:          
Cash and cash equivalents   71,583    49,263 
Cash and cash equivalents included in assets classified as held for sale   -    8,554 
Total of cash and cash equivalents  $71,583   $57,817 
           
Supplemental Cash Flows Information:          
Continuing operations:          
Cash paid for interest  $17,355   $66 
Cash paid for income tax  $-   $9 
           
Discontinued operations:          
Cash paid for interest  $9,549   $- 
Cash paid for income tax  $-   $- 
           
Supplemental Disclosure of Non-Cash Flows Information:          
Continuing operations:          
Common stock issued for loan settlement  $1,100,000   $52,000 

 

See accompanying notes to 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. In December 2018, the Company expanded its business operations to include marine tourism. In addition, the Company entered into the businesses of constructing marinas and constructing yachts in mainland China under the brand “Monte Fino”. 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 also operates “Joy Wave”(享浪),an online yacht rental and leisure service business in Guangzhou, China. In mainland China and Taiwan, primarily through the Internet, the Company provides third-party yacht and marine tourism services. This marine tourism involves visits to high quality coastal tourist attractions in Taiwan and China including Hainan, Guangdong, Xiamen, and Quanzhou. The field of marine tourism has expanded in recent years as the number of yachts that can be rented has been increased through yacht-sharing programs which make such opportunities available to more customers, though for limited time periods.

 

The Company also seeks to develop energy-saving yacht engines. It believes it has advanced technologies, that can enable it to produce engines that are 50% more efficient than those currently available. This energy-saving and innovative technology may be applied to new energy-saving engines for yachts. This innovative technology may bring favorable changes to the yachting industry and promote low-carbon tourism for global environmental protection.

 

On January 3, 2021, the Company entered into a Joint Venture and Cooperation Agreement to invest in Shenzhen Ocean Way Yachts Services Co., Ltd and its subsidiaries. On March 22, 2022, the Company sold its shares of Ocean Way and its subsidiaries to a third-party for $160,499 (RMB1,080,000).

 

On July 26, 2022, Khashing Yachts Industry (Guangdong) Limited changed its name to Guangdong Weiguan Ship Tech Co., Ltd (“Weiguan Ship”).

 

On July 6, 2022, Zhejiang Jiaxu Yacht Company Limited changed its name to Wenzhou Jiaxu Yacht Company Limited (“Jiaxu”).

 

On August 10, 2022, the noncontrolling shareholder surrendered its 30% of Wenzhou Jiaxu Yacht Company Limited to the Company, and Jiaxu became a wholly-owned subsidiary of the Company.

 

The Company also has a 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.

 

 8 

 

 

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 Weiguan Ship. In consideration for its interest in Weiguan Ship, the Company received RMB 1,000 ($137) consideration and the agreement of Mr. Kung to indemnify the Company and its affiliates and hold them harmless from, against and in respect of any and all claims arising out of or related to the business of Weiguan Ship whether arising before or after the date of the Stock Purchase Agreement, whether currently known or unknown, including, without limitation any claims for taxes.

 

Description of subsidiaries as of September 30, 2023

 

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   Hong Kong   Holding company and tourism consultancy service   52,000,000 ordinary shares for HK$2,159,440   100%
                 
Vivic Corp. Taiwan Branch   The Republic of China (Taiwan)   Provision of yacht service   Registered: TWD 5,000,000 Paid up: TWD5,000,000   100%

 

VIVC and its subsidiaries are hereinafter referred to as (the “Company”).

 

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”) for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments, unless otherwise indicated) considered necessary for a fair presentation of the Company’s financial position at such date and the operating results and cash flows for such periods. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period. The interim unaudited condensed consolidated financial information should be read in conjunction with the financial statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, previously filed with the SEC on March 30, 2023.

 

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.

 

 9 

 

 

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.

 

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 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, 2023 and December 31, 2022, the Company had no allowance for doubtful accounts.

 

Property, plant, 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  10 years
Motor vehicle  5 years
Office equipment  5 years

 

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 10 years.

 

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 and nine months ended September 30, 2023 and 2022 there were no intangible asset impairments to be recorded.

 

 10 

 

 

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.

 

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.

 

Comprehensive income/(loss)

 

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display 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 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 jurisdiction. 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.

 

 11 

 

 

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 in PRC, Taiwan and Hong Kong maintain their books and record 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.

 

Translation of amounts from RMB, TWD and HK$ into US$ has been made at the following exchange rates as of September 30, 2023 and December 31, 2022 and for the nine months ended September 30, 2023 and 2022.

 

   September 30, 2023   September 30, 2022   December 31, 2022 
Period/year-end RMB:US$ exchange rate   7.2960    7.1128    6.8972 
Period/annual average RMB:US$ exchange rate   7.0343    6.6023    6.7290 
Period/year-end HK$:US$ exchange rate   7.8308    7.8499    7.8015 
Period/annual average HK$:US$ exchange rate   7.8341    7.8332    7.8306 
Period/year-end TWD:US$ exchange rate   32.2400    31.7843    30.7300 
Period/annual average TWD:US$ exchange rate   30.9367    29.2791    29.7963 

 

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.

 

Noncontrolling interest

 

The Company accounts for noncontrolling interest in accordance with ASC Topic 810-10-45, which requires the Company to present noncontrolling interests as a separate component of total stockholders’ deficit on the condensed consolidated balance sheets and the net loss attributable to its noncontrolling interest be clearly identified and presented on the face of the unaudited condensed consolidated statements of operations and comprehensive loss.

 

Net loss per share of common stock

 

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 periods. 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.

 

 12 

 

 

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.

 

Concentrations and credit risk

 

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 note 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 approximate at 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 note payable approximate 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

 

Enterprises or individuals who sell commodities, engage in repair and consultation services in the PRC are subject to a value added tax in accordance with PRC Laws. The VAT standard rate had been 17% of the gross sale price until April 30, 2018, after which date the rate was reduced to 16%. VAT rate was further reduced to 13% starting from April 1, 2019. A credit is available whereby VAT paid on the purchases of semi-finished products or raw materials used in the production of the Company’s finished products can be used to offset the VAT due on the sales of the finished products.

 

 13 

 

 

Reclassification

 

Certain prior period accounts have been reclassified in conformity with current period’s presentation including reclassification of due to related party from other payables. These reclassifications had no impact on the reported results of operations and cash flows.

 

Recent accounting pronouncements

 

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently amended by Accounting Standards Update 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Accounting Standards Update 2019-04 Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and Accounting Standards Update 2019-05, Targeted Transition Relief. For public entities, ASU 2016-13 and its amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company adopted this guidance effective January 1, 2023. The adoption did not have significant impact on the Company’s unaudited condensed consolidated financial statements.

 

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 unaudited condensed consolidated financial statements and related disclosures.

 

NOTE - 3 DISCONTINUED OPERATIONS

 

On July 12, 2023, Vivic Hong Kong, a wholly-owned subsidiary of the Company, entered into a Stock Purchase Agreement with Yun-Kuang Kung (Mr. “Kung”) pursuant to which Mr. Kung acquired all of the shares of Weiguan Ship for RMB 1,000 ($137) and the agreement of Mr. Kung to indemnify the Company and its affiliates and hold them harmless from, against and in respect of any and all claims arising out of or related to the business of Weiguan Ship whether arising before or after the date of the Stock Purchase Agreement, whether currently known or unknown, including, without limitation any claims for taxes. Management of the Company elected to dispose of Weiguan Ship due to its history of losses and anticipated losses, and the Company’s potential liability for the amount of the subscribed capital contributions in Weiguan Ship.

 

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There were no material transactions for disposed group for the period from July 1, 2023 through July 12, 2023, and for the purpose of complying with the Company’s monthly accounting cut-off date, the Company used June 30, 2023 as the date of disposal. The following table summarizes the carrying value of the assets and liabilities of the disposed group at the closing date of disposal. The Company recorded $1.86 million gain on disposal of the subsidiaries, which was the difference between the selling price of US$138 and the carrying value of the net assets of the disposed group; further, under ASC 830-30-40-1, since the sale represented a substantially complete liquidation of the foreign entity, Vivic reclassified the entire accumulated currency translation adjustment balance of $0.17 million associated with Weiguan Ship from equity to gain on disposal.

 

   As of June 30, 2023 
ASSETS     
Current assets     
Cash and cash equivalents  $57,256 
Deposit and prepayments   267,832 
Inventory   1,553,453 
Other receivables   88,694 
Due from related parties   33,268 
Total current assets   2,000,503 
Non-current assets     
Property and equipment, net   355,885 
Construction in progress   74,349 
Operating lease right-of-use assets   287,646 
Total non-current assets   717,880 
Total assets  $2,718,383 
LIABILITIES     
Current liabilities     
Accounts payable  $433,325 
Other payables and accrued liabilities   239,777 
Deferred revenue   1,086,306 
Due to related parties including selling shareholders   2,389,282 
Income tax payable   5,183 
Operating lease liabilities-current   123,158 
Total current liabilities   4,277,031 
Operating lease liabilities-noncurrent   131,917 
Total non-current liabilities   131,917 
Total liabilities  $4,408,948 

 

The operations of Weiguan Ship and its subsidiaries are accounted for as discontinued operations in the accompanying consolidated financial statements for all periods presented. The following table presents the components of discontinued operations reported in the consolidated statements of operations:

 

   2023   2022   2023   2022 
  

For the three months, ended

September 30,

  

For the nine months, ended

September 30,

 
   2023   2022   2023   2022 
Revenue, Net  $-   $25,479   $957,667   $37,347 
Cost of Sales   -    28,811    650,586    38,701 
Gross Profit   -    (3,332)   307,081    (1,354)
                     
Operating Expenses   -    231,924    447,610    739,698 
                     
Loss from Operations   -    (235,256)   (140,529)   (741,052)
Other Income (Expense)                    
Investment gain (loss)   -    (1,130)   -    59,206 
Interest expense   -    -    (9,549)   (65)
Interest income   -    24    -    373 
Other income (expenses)   -    (277)   37,173    2,158 
                     
Total Other Income (Expenses)   -    (1,383)   27,624    61,672 
Loss Before Income Taxes   -    (236,639)   (112,905)   (679,380)
Income Tax Expense   -    -    -    - 
Net Loss from Discontinued Operations  $-   $(236,639)  $(112,905)  $(679,380)

 

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NOTE- 4 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 $71,583 of cash and cash equivalents and working capital of $2.21 million as of September 30, 2023, and although the Company generated net income of $1.84 million and $1.54 million during the three and nine months ended September 30, 2023, this was mainly from the gain on disposal of subsidiaries of $1.86 million.

 

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. 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.

 

NOTE-5 DEPOSIT AND PREPAYMENTS

 

Deposit and prepayments consisted of the following:

 

   September 30, 2023   December 31, 2022 
         
Prepayments  $1,128,630   $451,483 
Prepaid service fee   13,367    - 
Total deposit and prepayments  $1,141,997   $451,583 

 

Prepayments mainly consisted of prepaid expenses to vendors. Prepaid service fee consisted of prepaid OTC listing fee and annual filling fee.

 

NOTE- 6 PROPERTY AND EQUIPMENT

 

Property and equipment consisted of the following:

 

   September 30, 2023   December 31, 2022 
         
Office equipment  $2,542   $2,668 
Subtotal   2,542    2,668 
Less: accumulated depreciation   (1,488)   (1,210)
Property, plant and equipment, net  $1,054   $1,458 

 

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Depreciation expense for the three months ended September 30, 2023 and 2022 was $115 and $141, respectively.

 

Depreciation expense for the nine months ended September 30, 2023 and 2022 was $350 and $234, respectively.

 

NOTE- 7 INTANGIBLE ASSETS

 

Intangible assets consisted of the following:

 

   September 30, 2023   December 31, 2022 
         
Software  $7,130   $7,485 
Total intangible assets   7,130    7,485 
Less: accumulated amortization   (3,366)   (1,663)
           
Intangible assets, net  $3,764   $5,822 

 

Amortization expense for the three months ended September 30, 2023 and 2022 was $602 and $572, respectively.

 

Amortization expense for the nine months ended September 30, 2023 and 2022 was $1,856 and $999, respectively.

 

NOTE- 8 INVENTORY

 

Inventory consisted of the following:

 

   September 30, 2023   December 31, 2022 
         
Finished goods  $124,000   $          - 
Total inventory   124,000    - 
Less: inventory impairment   -    - 
Inventory, net  $124,000   $- 

 

NOTE- 9 ACCRUED LIABILITIES AND OTHER PAYABLES

 

Accrued liabilities and other payables consisted of the following:

 

   September 30, 2023   December 31, 2022 
         
Accrued penalty  $45,000   $- 
Accrued salaries   1,367    1,236 
Accrued consulting fee   105,000    60,000 
Other payables   44,829    86,006 
Total accrued liabilities and other payable  $196,196   $147,242 

 

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 $60,000.

 

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The Company recorded the $60,000 fine, and during the three and nine months ended September 30, 2023, the Company made a payment of $15,000 to an escrow account, which fund was subsequently released to the SEC.

 

Accrued liabilities and other payables are the expenses that will be settled in next twelve months.

 

NOTE- 10 LOAN PAYABLE

 

On March 13, 2023, Vivic Taiwan entered a loan agreement with a third-party individual. Vivic Taiwan borrowed TWD 5,000,000 ($164,042) from this individual for a term of one year, with annual interest 10%, the interest is to be paid monthly. Vivic Taiwan was required to pay the interest for the first and second months on the 15th of the month in which the Company received the loan proceeds. During the three and nine months ended September 30, 2023, the Company recorded interest expense of $3,961 and $10,246, respectively. The loan is collateralized by 162,391 shares of the Company’s common stock owned by the son of the Company’s CEO (Mr. Yun-Kuang Kung). The fair value of 162,391 shares was $82,836 on March 13, 2023. When the loan matures, the lender has the option to ask for cash repayment from the Company or keep the 162,391 shares of the Company’s stock as repayment in full. If the lender decides to keep the 162,391 shares at maturity of the loan, the Company will repay TWD 5,000,000 ($164,042) to Yun-Kuang Kung without any interest. If the Company is not able to repay Yun-Kuang Kung by March 15, 2025, the Company is required to issue a number of shares equivalent to the loan amount based upon the fair market value of the shares at such date, plus 10% more of the equivalent shares.

 

On May 18, 2023, Vivic Taiwan entered a loan agreement with Taiwan Hua Nan Bank. Vivic Taiwan borrowed TWD 12,000,000 ($381,658) from the bank for a term of one year, with an annual interest rate of approximately 3%, the interest is to be paid monthly. During the three and nine months ended September 30, 2023, the Company recorded interest expense of $2,436 and $3,269, respectively. The loan is collateralized by a piece of land and real property. In addition, the loan is guaranteed by Yun-Kuang Kung (son of Shang-Chiai Kung CEO of Vivic Corp) and Kung Huang Liu Shiang (spouse of Shang-Chiai Kung CEO of Vivic Corp).

 

NOTE- 11 SBA LOAN PAYABLE

 

On June 23, 2020, Vivic Corp. received an $87,500 Economic Injury Disaster Loan (“EIDL loan”) from the Small Business Administration (“SBA”). This is a low-interest federal disaster loan for working capital to small businesses and non-profit organizations of any size suffering substantial economic injury as a result of the Coronavirus (COVID-19) epidemic, to help businesses to meet financial obligations and operating expenses that could have been met had the disaster not occurred. This loan has an annual interest rate of 3.75% and is not forgivable. The maturity of the loan is 30 years, installment payments including principal and interest of $427 monthly will begin 30 months from the loan disbursement date. Due to the fact that the loan repayment was deferred for 30 months, the payments are going 100% toward the interest since the interest started to accrue from the original disbursement date. For the three months ended September 30, 2023 and 2022, the Company made payments of interest of $1,281 and $0, respectively. For the nine months ended September 30, 2023 and 2022, the Company made payments of interest of $3,843 and $0 on the EIDL loan, respectively.

 

As of September 30, 2023, the future minimum EIDL loan payments for the Company to be paid by year are as follows:

 

Year Ending September 30,  Amount 
2024  $5,124 
2025   5,124 
2026   5,124 
2027   5,124 
2028   5,124 
Thereafter   61,880 
Total  $87,500 

 

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NOTE- 12 STOCKHOLDERS’ DEFICIT

 

Authorized Shares

 

The Company is authorized to issue 5,000,000 shares of preferred stock and 70,000,000 shares of common stock each with a par value of $0.001 per share.

 

Preferred Stock

 

As of September 30, 2023 and December 31, 2022, the Company had 832,000 shares of its preferred stock issued and outstanding.

 

Common Stock

 

On February 15, 2022, the Company issued 50,000 shares of common stock to settle a debt in the amount of $50,000, at an agreed conversion price of $1.00 per share. A loss of $2,000 on the loan settlement has been recognized for the three months ended March 31, 2022.

 

On March 22, 2022, the Company cancelled 60,000 shares of common stock previously issued to its former CFO due to termination of employment.

 

On May 26, 2023, the Company issued 1,111,111 shares of common stock to settle a debt due to Yun-Kuang Kung in the amount of $1,100,000, at a conversion price of $0.99 per share.

 

As of September 30, 2023 and December 31, 2022, the Company had 26,657,921 and 25,546,810 shares of its common stock issued and outstanding, respectively.

 

NOTE- 13 NET INCOME (LOSS) PER SHARE OF COMMON STOCK

 

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 and nine months ended September 30, 2023 and 2022:

 

   2023   2022 
   Three months ended September 30, 
   2023   2022 
Net loss for basic and diluted attributable to Vivic Corp-continuing operations.  $(20,060)  $(51,674)
Net income (loss) for basic and diluted attributable to Vivic Corp-discontinued operations.   1,859,207    (233,327)
Weighted average common stock outstanding – Basic and Diluted   26,657,921    25,546,810 
Net loss per share of common stock – basic and diluted-continuing operations   (0.001)   (0.002)
Net income (loss) per share of common stock – basic and diluted-discontinued operations   $0.070   $(0.009)

 

   2023   2022 
   Nine months ended September 30, 
   2023   2022 
Net loss for basic and diluted attributable to Vivic Corp.-continuing operations  $(208,341)  $(117,078)
Net income (loss) for basic and diluted attributable to Vivic Corp-discontinued operations   1,746,302    (641,510)
Weighted average common stock outstanding – Basic and Diluted   26,063,700    25,550,253 
Net loss per share of common stock – basic and diluted-continuing operations   (0.008)   (0.005)
Net income (loss) per share of common stock – basic and diluted-discontinued operations  $0.067   $(0.025)

 

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NOTE- 14 RELATED PARTY TRANSACTIONS

 

a. Related parties

 

Name of Related Party   Relationship to the Company
Yun-Kuang Kung   Son of Shang-Chiai Kung CEO of Vivic Corp.
Kung Huang Liu Shiang spouse   Spouse of Shang-Chiai Kung CEO of Vivic Corp.
Yufei Zeng   Stockholder of Vivic Corp.
Shang-Chiai Kung   CEO of Vivic Corp.
Kun-Teng Liao   Secretary and Board Member
Guangdong Weiguan Ship   Yun-Kuang Kung acquired 100% ownership of this entity from Vivic

 

b. Due from related parties, net

 

Due from related parties consisted of the following:

 

Name  September 30, 2023   December 31, 2022 
Yun-Kuang Kung  $204,215   $- 
Guangdong Weiguan Ship   2,616,977              - 
Total  $2,821,192   $- 

 

c. Due to related parties, net

 

Due to related parties consisted of the following:

 

Name  September 30, 2023   December 31, 2022 
Yun-Kuang Kung  $-   $63,770 
Kung Huang Liu Shiang spouse   155,271    - 
Shang-Chiai Kung   190,416    209,940 
Kun-Teng Liao   -    - 
Total  $345,687   $273,710 

 

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, 2023 and December 31, 2022, the Company has no 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 financial statements were issued and determined the Company had no major subsequent event need to be disclosed.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited financial statements and the notes to those statements included elsewhere in this Form 10-Q and with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”). This discussion contains forward-looking statements that involve risks and uncertainties. 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 important 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. You should specifically consider the various risk factors identified in our 2022 Form 10-K, that could cause actual results to differ materially from those anticipated in these forward-looking statements.

 

Overview

 

VIVIC CORP. (“VIVC”) was incorporated in the State of Nevada on February 16, 2017. In December 2018, we expanded our business operations to include marine tourism. In addition, we started making efforts to enter the businesses of constructing marinas and constructing yachts in mainland China under the brand “Monte Fino”. Monte Fino is a famous yacht brand owned by Taiwan Kha Shing Yacht Company, one of the leading yacht manufacturers in the world.

 

We also developed and operate “Joy Wave”, an online yacht rental and leisure service business in Guangzhou, China. We provide third-party yacht and marine tourism services in mainland China and Taiwan primarily offering our services through the Internet. The tourism packages we provide are focused on providing high quality coastal voyages to leading vacation and tourism destinations in Taiwan and China including Hainan, Guangdong, Xiamen, and Quanzhou. In the field of marine tourism, the number of yachts that can be rented has been increased through yacht-sharing programs which make yachts available to more customers though for limited time periods.

 

We also initiated efforts to develop energy-saving yacht engines. We believe that our advanced technologies will enable us to produce engines that are 50% more energy efficient than those generally available today. This energy-saving and innovative technology may be applied to new energy-saving engines for yachts. This innovative technology may bring favorable changes to the yachting industry and promote low-carbon tourism for global environmental protection.

 

Results of Operations

 

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 (Mr. “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 the Company and its affiliates and hold them harmless from, against and in respect of any and all claims arising out of or related to the business of Weiguan Ship whether arising before or after the date of the Stock Purchase Agreement, whether currently known or unknown, including, without limitation any claims for taxes. The divestiture of Weiguan Ship is part of our plan to concentrate primarily on our 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 in the financial statements included in this report 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.

 

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Comparison of continuing operations for the three months ended September 30, 2023 and 2022

 

                   Dollar   Percent 
   2023   % of sales   2022   % of sales   Increase
(Decrease)
   Increase
(Decrease)
 
Revenue, net  $791,043    100.00%  $-    -%  $791,043    -%
Cost of revenue   699,217    88.39%   -    -%   699,217    -%
Gross profit   91,826    11.61%   -    -%   91,826    -%
General and administrative expenses   105,234    13.30%   51,092    -%   54,142   105.97%
Total operating expenses   105,234    13.30%   51,092    -%   54,142   105.97%
Loss from operations   (13,408)   (1.69)%   (51,092)   -%   (37,684)   (73.76)%
Other expenses, net   (6,652)   (0.84)%   (582)   -%   6,070   1,042.96%
Loss before income taxes   (20,060)   (2.54)%   (51,674)   -%   (31,614)   (61.18)%
Income tax expense   -    -%   -    -%   -    -%
Net loss from continuing operations   (20,060)   (2.54)%   (51,674)   -%   (31,614)   (61.18)%
Net income (loss) from discontinued operations   1,859,207    235.03%   (236,639)   -%   2,095,846    885.67%
Net income (loss) for the period   1,839,147    232.50%   (288,313)   -%   2,127,460    737.90%
Net loss attributable to noncontrolling interest arising from                              
Continuing operations   -    -%   -    -%   -    -%
Discontinued operations   -    -%   (3,312)   -%   3,312    (100.00)%
Net income (loss) attributable to Vivic Corp. arising from                              
Continuing operations   (20,060)   (2.54)%   (51,674)   -%   (31,614)   (61.18)%
Discontinued operations   1,859,207    235.03%   (233,327)   -%   2,092,534    896.82%
Total net income (loss) attributable to Vivic Corp.  $1,839,147    232.50%  $(285,001)   -%  $2,124,148    745.31%

 

Revenue

 

Revenue from continuing operations was $791,043 for the three months ended September 30, 2023, representing an increase of $791,043 from the three months ended September 30, 2022, in which there was no revenue. The increase was mainly due to the inception of sales in our Taiwan branch, reflecting our plan to concentrate primarily on our business in Taiwan.

 

Cost of revenue

 

Cost of revenue from continuing operations was $699,217 for the three months ended September 30, 2023, an increase of $699,217, from the three months ended September 30, 2022, in which there were no revenues or cost of revenues. The increase was mainly due to the inception of sales in our Taiwan branch.

 

Gross profit

 

Gross profit from continuing operations was $91,826 for the three months ended September 30, 2023, an increase of $91,826, from gross profit in the three months ended September 30, 2022, when there were no sales. The increase was mainly due to the inception of sales that are generated in our Taiwan branch.

 

Operating expenses

 

General and administrative expenses from continuing operations were $105,234 for the three months ended September 30, 2023, compared to $51,092 for the three months ended September 30, 2022, an increase of $54,142 or 105.97%. The increase was mainly due to an increase in management service fees of $15,000, an increase in staffing fees of $36,046, an increase in professional fee of $42,978 and increase in other expense of $32,562 which was partly offset by decreased consulting expenses of $67,000 decreased social security insurance expenses of $3,801 and decreased subscription fee of $3,554.

 

Other expenses, net

 

Net other expense from continuing operations was $6,652 for the three months ended September 30, 2023, and net other expense from continuing operations was $582 for the three months ended September 30, 2022, respectively. For the three months ended September 30, 2023, the net other expense mainly consisted of interest expense of $6,271, and other expense of $381. For the three months ended September 30, 2022, the net other income mainly consisted of interest expense of $444, and other expense of $138.

 

Net income (loss) from discontinued operations

 

We had net income from discontinued operations of $1,859,207 for the three months ended September 30, 2023, compared to a net loss of $233,327 for the three months ended September 30, 2022, the net income from discontinued operations was mainly the gain on disposal of Weiguan Ship.

 

Net loss from continuing operations

 

We had a net loss from continuing operations of $20,060 for the three months ended September 30, 2023, compared to a net loss of $51,674 for the three months ended September 30, 2022, a decrease of $31,614 or 61.18%, for the reasons explained above.

 

 22 

 

 

Comparison of continuing operations for the nine months ended September 30, 2023 and 2022

 

                   Dollar   Percent 
   2023   % of
sales
   2022   % of
sales
   Increase
(Decrease)
   Increase
(Decrease)
 
Revenue, net  $791,043    100.00%  $-    -%  $791,043    -%
Cost of revenue   699,217    88.39%   -    -%   699,217    -%
Gross profit   91,826    11.61%   -    -%   91,826    -%
General and administrative expenses   257,668    32.57%   107,689    -%   149,979    139.27%
Total operating expenses   257,668    32.57%   107,689    -%   149,979    139.27%
Loss from operations   (165,842)   (20.96)%   (107,689)   -%   58,153   54%
Other expenses, net   (42,499)   (5.37)%   (9,380)   -%   33,119   353.08%
Loss before income taxes   (208,341)   (26.34)%   (117,069)   -%   91,272    77.96%
Income tax expense   -    %    9    -%   (9)   (100.00)%
Net loss from continuing operations   (208,341)   (26.34)%   (117,078)   -%   91,263    77.95%
Net income (loss) from discontinued operations   1,746,302    220.76%   (679,380)   -%   2,425,682    (357.04)%
Net income (loss) for the period   1,537,961    194.42%   (796,458)   -%   2,334,419    293.10%
Net loss attributable to noncontrolling interest arise from                              
Continuing operations   -    -%   -    -%   -    -%
Discontinued operations   -    -%   (37,870)   -%   (37,870)   (100.00)%
Net income (loss) attributable to Vivic Corp. arise from   -    0.00%   (37,870)   -%   (37,870)   (100.00)%
Continuing operations   (208,341)   (26.34)%   (117,078)   -%   91,263    77.95%
Discontinued operations   1,746,302    220.76%   (641,510)   -%   2,387,812    372.22%
Total net income (loss) attributable to Vivic Corp.   1,537,961    194.42%   (758,588)   -%   2,296,549    302.74%

 

Revenue

 

Revenue from continuing operations was $791,043 for the nine months ended September 30, 2023, representing an increase of $791,043 from the nine months ended September 30, 2022, in which there was no revenue. The increase was mainly due to the inception of sales in our Taiwan branch.

 

Cost of revenue

 

Cost of revenue from continuing operations was $699,217 for the nine months ended September 30, 2023, an increase of $699,217 from the nine months ended September 30, 2022, in which there were no revenues or cost of revenues. The increase was mainly due to the inception of sales in our Taiwan branch.

 

Gross profit

 

Gross profit from continuing operations was $91,826 for the nine months ended September 30, 2023, an increase of $91,826, from gross profit in the nine months ended September 30, 2022, when there were no sales. The increase was mainly due to the inception of sales in our Taiwan branch.

 

Operating expenses

 

General and administrative expenses from continuing operations were $257,668 for the nine months ended September 30, 2023, compared to $107,689 for the nine months ended September 30, 2022, an increase of $149,979 or 139.27%. The increase was mainly due to an increase in staffing fees of $114,311, an increase in professional expenses of $65,227, increased management service fees of $45,000, increased travel expense of $2,664 and increased other expenses of $32,224, which were partly offset by decreased consulting expenses of $83,300, decreased subscription fee of $12,590, and decreased payroll expense of $14,349.

 

Other expenses, net

 

Net other expense from continuing operations was $42,499 for the nine months ended September 30, 2023, and net other expenses from continuing operations was $9,380 for the nine months ended September 30, 2022, respectively. For the nine months ended September 30, 2023, the net other expense mainly consisted of interest expense of $13,197, and other expenses of $29,302. For the nine months ended September 30, 2022, the net other expense mainly consisted of interest expense of $7,007, and other expense of $2,373.

 

Net income (loss) from discontinued operations

 

We had net income from discontinued operations of $1,746,302 for the nine months ended September 30, 2023, compared to net loss of 679,380 for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, we had a gain on disposal of Weiguan Ship of $1,859,207, and a loss from the operations of Weiguan Ship, up to the date of disposal.

 

Net loss from continuing operations

 

We had a net loss from continuing operations of $208,341 for the nine months ended September 30, 2023, compared to $117,078 for the nine months ended September 30, 2022, an increase of $91,263 or 77.95%, for the reasons explained above.

 

 23 

 

 

LIQUIDITY AND GOING CONCERN

 

We had $71,583 of cash and cash equivalents and working capital of $2,211,296 as of September 30, 2023, and incurred a net loss from continuing operations of $20,060 and $208,341 during the three and nine months ended September 30, 2023, respectively. The following is a summary of cash provided by or used in each of the indicated types of activities during the nine months ended September 30, 2023, and 2022.

 

   2023   2022 
Net cash used in operating activities for continuing operations  $(134,315)  $(154,957)
Net cash (used in) provided by operating activities for discontinued operations   (235,558)   82,318 
Net cash provided by (used in) operating activities   (369,873)   (72,639)
           
Net cash used in investing activities for continuing operations   32,185    (7,236)
Net cash (used in) provided by investing activities for discontinued operations   (75,967)   65,759 
Net cash (used in) provided by investing activities   (43,782)   58,523 
           
Net cash provided by financing activities for continuing operations   134,598    100,585 
Net cash provided by (used in) financing activities for discontinued operations   282,419    (161,813)
Net cash used in financing activities  $417,017   $(61,228)

 

Net cash from continuing operations used in or provided by operating activities

 

The net cash used in operating activities from continuing operations was $134,135 for the nine months ended September 30, 2023, compared to net cash used in operating activities from continuing operations of $154,957 for the nine months ended September 30, 2022. The decrease in cash outflow from operating activities for the nine months ended September 30, 2023 was principally attributable to an increase in cash inflow from deferred revenue of $997,298, which was mainly customer deposits for sales orders received in our Taiwan branch, which was partly offset by increased cash outflows from deposits and prepayments of $738,475, increased cash outflows from inventory of $129,201, and increased cash outflows from other receivables of $104,788.

 

Net cash from continuing operations used in or provided by investing activities

 

Net cash provided by investing activities for continuing operations was $32,185 for the nine months ended September 30, 2023, compared to net cash used in investing activities for continuing operations of $7,236 for the nine months ended September 30, 2022. The net cash provided by investing activities for continuing operations for the nine months ended September 30, 2023, consisted of cash from discontinued operations of $32,185. The net cash used in investing activities for continuing operations for the nine months ended September 30, 2022, consisted of the purchase of office equipment for $7,236.

 

Net cash from continuing operations provided by or used in financing activities

 

The net cash provided by financing activities from continuing operations was $134,598 for the nine months ended September 30, 2023, compared to net cash provided by financing activities from continuing operations of $100,585 for nine months ended September 30, 2022. The net cash provided by financing activities from continuing operations for the nine months ended September 30, 2023, consisted of proceeds from loans of $549,100, partly offset by changes in amounts due to related parties of $414,502. The net cash provided by financing activities from continuing operations for the nine months ended September 30, 2022, consisted of proceeds from issuance of shares of $50,000 and proceeds from changes in amounts due related parties of $50,585.

 

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 $71,583 cash and cash equivalents available for the Company’s continuing operations and working capital of $2,211,296 as of September 30, 2023 and incurred a net loss of $208,341 from continuing operations during the nine months ended September 30, 2023.

 

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.

 

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 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 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 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.

 

 24 

 

 

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 Annual 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.

 

SIGNIFICANT ACCOUNTING POLICIES

 

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 Annual Report.

 

● 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.

 

● Net loss per share

 

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.

 

● Recent accounting pronouncements

 

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.

 

 25 

 

 

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.

 

At September 30, 2023, 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 was carried out under the supervision and with the participation of our Chief Executive Officer who is also our Chief Financial Officer. Based on his evaluation of our disclosure controls and procedures, he concluded that at September 30, 2023, 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 as our business develops, 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. However, 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.

 

 26 

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

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, for not 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 $60,000.

 

Item 1A. Risk Factors

 

Reference is made to the risks and uncertainties disclosed in Item 1A (“Risk Factors”) of our 2022 Form 10-K, which are incorporated by reference into this report. Prospective investors are encouraged to consider the risks described in the 2022 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, 2023, 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

 

None

 

Item 6. Exhibits

 

Exhibit

No.

  Description
     
3.1   Articles of Incorporation (incorporated by reference to the Company’s Registration Statement on Form S-1 filed February 17, 2021).
     
3.2  

Bylaws of the Registrant (incorporated by reference to the Company’s Registration Statement on Form S-1 filed February 17, 2021).

     
10.1  

Stock Purchase Agreement dated July 12, 2023, between Vivic Corporation (Hong Kong) Co. Limited and Yun-Kuang Kung (incorporated by reference to report on Form 8-K dated July 12, 2023).

     
10.2  

Debt Conversion Agreement dated May 26, 2023, between the Company and Yun-Kuang Kung (incorporated by reference to report on Form 8-K dated May 26, 2023)

     
31.1   Certification of Chief Executive Officer pursuant to Rule 13a-14 or Rule 15d-14 of Securities Exchange Act of 1934.
     
31.2   Certification of Chief Financial Officer pursuant to Rule 13a-14 or Rule 15d-14 of Securities Exchange Act of 1934.
     
32.1   Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
     
32.2   Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
     
101.INS   Inline XBRL Instance Document
101.SCH   Inline XBRL Taxonomy Extension Schema
101.CAL   Inline XBRL Taxonomy Extension Calculation
101.DEF   Inline XBRL Taxonomy Extension Definition
101.LAB   Inline XBRL Taxonomy Extension Label
101.PRE   Inline XBRL Taxonomy Extension Presentation
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 27 

 

 

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, 2023 By: /s/ Shang-Chiai Kung
    Shang-Chiai Kung
    President and Chief Executive Officer
   

(Principal Executive Officer and

Principal Accounting Officer)

 

 28