VIVC 10-Q/A
Vivic Corp. (VIVC)
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No.1) |
Mark One
For the quarterly period ended
For the transition period from ______ to _______
Commission file #
(Exact name of registrant as specified in its charter)
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State or Other Jurisdiction of Incorporation or Organization) |
(Primary Standard Industrial Classification Number) |
(IRS Employer Identification Number) |
Tel:
(Address and telephone number of registrant's executive office)
702-899-0818
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered | ||||||||||
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Common Stock, par value $0.001 per share |
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VIVC |
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OTCQB | ||||||||||
Indicate by checkmark whether the issuer: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer [ ]
Smaller
reporting 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 13(a) of the Exchange Act. [
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:
Common stock, $0.001 par value; 70,000,000 shares authorized; common stocks as of November 15, 2021.
1
EXPLANATORY NOTE
References throughout this Amendment No.1 to the Quarterly Report on From 10-Q to “we,” “us,” the Company” or “our company” are to VIVIC CORP., unless the context otherwise indicates.
On January 3, 2021, ViVic Corp. (the “Company”) entered into a Joint Venture and Cooperation Agreement to invest in Shenzhen Ocean Way Yachts Services Co., Ltd (“Ocean Way”). In the Previous Filings, the Company’s investment in Ocean Way was treated as an acquisition and the financial statements of Ocean Way were consolidated into the financial statements of the Company. During the year ended December 31, 2021, the Company has invested a total amount of $122,665 (RMB 780,000), or approximately 43.8% of total ownership. On May 28, 2022, the Company’s management and the board of directors (the “Board”) after consultation with YCM CPA, Inc., the Company’s independent registered public accounting firm, concluded the investment in Ocean Way should be considered as a long-term investment. Therefore, the consolidation of Ocean Way’s financial statements was erroneous.
Therefore, on May 28, 2022, the Board of the Company concluded that due to de-consolidation of the Company’s subsidiary, the Company’s previously issued unaudited interim financial statements included in the quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2021, filed on November 15, 2021, unaudited interim financial statements included in the quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2021, filed on August 12, 2021, and unaudited interim financial statements included in the quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2021, filed on May 14, 2021 (each a “Previous Filing” and collectively “Previous Filings”), should no longer be relied upon.
In preparation of this Amendment No. 1 to Quarterly Report on Form 10-Q/A, the Company concluded it inadvertently used incorrect stock prices in loan settlement contracts instead of fair market prices. The impact of the incorrect assumption was an understatement of loss on loan settlement and an understatement of Additional paid-in capital.
As such, the Company is filing this Amendment No. 1 to amend and restate the Original Filing with modification as necessary to reflect the restatements. The following items have been amended to reflect the restatements:
Part I, Item 1, Financial Statements
Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Amendment No. 1 reflects events occurring after the filing of the Original Filing, and, except as described above, does not modify or update any other disclosures in the Previous Filing.
2
Table of Contents
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PART I FINANCIAL INFORMATION
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ITEM 1 |
Condensed Consolidated Balance Sheets as of September 30, 2021 (As Restated) (Unaudited) and December 31, 2020 |
4 |
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 (As Restated) and 2020 |
5 | |
Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2021 (As Restated) and 2020 |
6 | |
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 (As Restated) and 2020 |
7 | |
Notes to unaudited Condensed Consolidated Financial Statements (As Restated) |
8 | |
ITEM 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
ITEM 3 |
Quantitative and Qualitative Disclosures About Market Risk |
22 |
ITEM 4 |
Controls and Procedures |
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PART II OTHER INFORMATION
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ITEM 1 |
Legal Proceedings |
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ITEM 2 |
Unregistered Sales of Equity Securities and Use of Proceeds |
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ITEM 3 |
Defaults Upon Senior Securities |
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ITEM 4 |
Mine Safety Disclosures |
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ITEM 5 |
Other Information |
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ITEM 6 |
Exhibits |
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Signatures |
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VIVIC CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2021 | December 31, 2020 | |||||||
(Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Deposits and prepayments | ||||||||
| Inventory | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Long-term investment | ||||||||
| Property, plant and equipment, net | ||||||||
| Construction in process | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other noncurrent assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities and other payables | ||||||||
| Due to related parties | ||||||||
| Deferred revenue | ||||||||
| Operating lease liabilities-current | ||||||||
| Income tax payable | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Operating lease liabilities-noncurrent | ||||||||
| Promissory note | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Preferred stock, $ par value; shares authorized; shares issued and outstanding as of September 30, 2021 and December 31, 2020 | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Vivic Corp. shareholders’ equity | ||||||||
| Non-controlling interest | ( | ) | ||||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
4
VIVIC CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| REVENUE | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit | ( | ) | ||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | $ | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | |||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expenses: | ||||||||||||||||
| Impairment of goodwill | ( | ) | ( | ) | ||||||||||||
| Investment loss | ( | ) | ( | ) | ||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on loan settlement | ( | ) | ( | ) | ||||||||||||
| Other income | ||||||||||||||||
| Total other expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes | ||||||||||||||||
| NET LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to Vivic Corp. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss: | ||||||||||||||||
| Foreign currency translation loss | ( | ) | ( | ) | ( | ) | ||||||||||
| COMRPEHENSIVE LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share – Basic and Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding – Basic and Diluted | ||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
5
VIVIC CORP.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ (DEFICIT) EQUITY
(Unaudited)
| For the Three and Nine Months Ended September 30, 2021 and 2020 | ||||||||||||||||||||||||||||||||||||
| Equity attributable to VIVIC Corp. shareholders | ||||||||||||||||||||||||||||||||||||
| Preferred stock | Common stock | Additional paid-in | Accumulated other comprehensive | Accumulated | Noncontrolling | Total shareholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | (loss) income | deficit | interests | (deficit) equity | ||||||||||||||||||||||||||||
| Balance as of December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of March 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||
| Cancellation of shares | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||
| Cancellation of shares | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Proceeds from issuance of common stock | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of September 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Balance as of December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Shares issued for loan settlement | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Shares issued for loan settlement | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of June 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||
| Shares issued for loan settlement | - | |||||||||||||||||||||||||||||||||||
| Shares issued for acquiring ownership of subsidiary | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of September 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||
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, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation of property, plant and equipment | ||||||||
| Amortization of right-of-use assets | ||||||||
| Interest expense | ||||||||
| Investment gain(loss) | ||||||||
| Impairment of goodwill | ||||||||
| Loss on loan settlement | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Deposits and prepayments | ( | ) | ( | ) | ||||
| Other receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Other non-current assets | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued liabilities and other payables | ( | ) | ||||||
| Income tax payable | ( | ) | ( | ) | ||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Investment in a subsidiary | ( | ) | ||||||
| Purchase of property, plant and equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Repayment to related parties | ( | ) | ( | ) | ||||
| Proceeds from issuance of common and preferred stocks | ||||||||
| Proceeds from promissory note | ||||||||
| Proceeds from loans | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect on exchange rate change on cash and cash equivalents | ( | ) | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | ( | ) | ( | ) | ||||
| CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | $ | ||||||
| Supplemental Cash Flows Information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income tax | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Flows Information: | ||||||||
| Common stock issued for loan settlement | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
7
VIVIC CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE － 1 ORGANIZATION AND BUSINESS BACKGROUND
VIVIC CORP. (the "Company" or “VIVC”) is a corporation established under the corporation laws in the State of Nevada on February 16, 2017. Starting December 27, 2018, associated with the change of management, we expanded our business operations to include new types of marine tourism. In addition, the Company started making efforts to enter into the businesses of constructing marinas and constructing yachts in the mainland China under the brand of 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.
It has also developed and operates “Joy Wave”(享浪)，an online yacht rental and leisure service business in Guangzhou, China. In the mainland China and Taiwan, primarily through the Internet, we provide third-party yacht and marine tourism services. This marine tourism involves high quality coastal tourism attractions 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 a yacht-sharing program system, which can provide services for more customers.
The Company also started to develop energy-saving yacht engines. Because it has advanced technology, it can achieve up to 50% energy efficiency. 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 a 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. During the nine months ended September 30, 2021, the Company has invested a total amount of $120,698 (RMB 780,000), which is approximately equal to 43.8% ownership.
On May 11, 2021, the Company’s subsidiary namely Guangzhou Khashing Yacht Company Limited ceased its operation and de-registered.
On September 23, 2021, the Company acquired the additional 25% of Vivic Corporation (Hong Kong) Co., Limited.
Description of subsidiaries
| 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 | Investment holding and tourism consultancy service | 52,000,000 ordinary shares for HK$2,159,440 | 100% | ||||
| Khashing Yachts Industry (Guangdong) Limited (formerly Guangzhou Monte Fino Yacht Company Limited) | The People’s Republic of China | Tourism consultancy service and provision of yacht service | Registered: RMB10,000,000 Paid up: RMB4,236,132 | 100% | ||||
| Guangzhou Hysoul Yacht Company Limited | The People’s Republic of China | Provision of yacht service | Registered: RMB10,000,000 Paid up: RMB845,000 | 100% | ||||
| Zhejiang Jiaxu Yacht Company Limited | The People’s Republic of China | Provision of yacht service | Registered: RMB30,000,000 Paid up: RMB1,030,000 | 70% |
VIVC and its subsidiaries are hereinafter referred to as (the “Company”).
NOTE － 2 RESTATEMENT EFFECTS ON ISSUED FINANCIAL STATEMENTS
The restatement primarily is caused by two issues. First, in the three quarterly reports filed in 2021, the Company inadvertently used incorrect stock prices in loan settlement contracts instead of fair market prices. The impact of the incorrect assumption was an understatement of Loss on loan settlement and an understatement of Additional paid-in capital by approximately $1,340,664 during the three and nine months ended September 30, 2021.
8
Second, In the three quarterly reports filed in 2021, the Company entered in an share exchange agreement to invest in 60% share of Ocean Way, a local company by issuing its common stocks to the owner of the Company. However, both the Company and the owner agreed to terminate the share exchange transaction later on. Furthermore, although later the Company invested cash in Ocean Way instead, the owner still has the right to assign the majority of members in the Board of Ocean Way. The Company incorrectly recognized Common Shares and recorded Ocean Way as a subsidiary. The impact of the incorrect assumption was an understatement of a series of accounts including Common stock, Additional paid-in capital and Accumulated deficit during the three and nine months ended September 30, 2021.
The following table illustrates the impact of the restated unaudited consolidated balance sheet, the unaudited statement of operations and unaudited statement of cash flows for the nine months ended September 30, 2021.
| As Previously Reported | Adjustment | As Restated | ||||||||||||
| Consolidated Balance Sheet at September 30, 2021: | ||||||||||||||
| Cash and cash equivalents | A | $ | $ | ( | ) | $ | ||||||||
| Accounts receivables | A | ( | ) | |||||||||||
| Deposits and prepayments | A | ( | ) | |||||||||||
| Inventory | A | |||||||||||||
| Other current assets | A | |||||||||||||
| Total current assets | ( | ) | ||||||||||||
| Long-term investment | A | |||||||||||||
| Property, plant and equipment, net | A | ( | ) | |||||||||||
| Construction in process | ||||||||||||||
| Operating lease right-of-use assets | A | |||||||||||||
| Other noncurrent assets | A | |||||||||||||
| TOTAL ASSETS | ||||||||||||||
| Accounts payable | A | $ | $ | ( | ) | $ | ||||||||
| Accrued liabilities and other payables | A | ( | ) | |||||||||||
| Deferred revenue | A | |||||||||||||
| Due to related parties | A | ( | ) | |||||||||||
| Operating lease liabilities-current | A | |||||||||||||
| Income tax payable | ||||||||||||||
| Total current liabilities | ( | ) | ||||||||||||
| Operating lease liabilities-noncurrent | A | |||||||||||||
| Total liabilities | ( | ) | ||||||||||||
| Preferred stock | ||||||||||||||
| Common stock | ||||||||||||||
| Common stock to be issued | A | ( | ) | |||||||||||
| Additional paid-in capital | B | |||||||||||||
| Accumulated other comprehensive income (loss) | A | ( | ) | |||||||||||
| Accumulated deficit | A,B | ( | ) | ( | ) | ( | ) | |||||||
| Total Vivic Corp. shareholders’ equity | ( | ) | ||||||||||||
| Non-controlling interest | A | ( | ) | ( | ) | |||||||||
| Total shareholders’ equity | ( | ) | ||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
9
| Consolidated Statements of Operations for three months ended September 30, 2021: | ||||||||||||||
| REVENUE | A | $ | $ | ( | ) | $ | ||||||||
| Cost of revenue | A | ( | ) | ( | ) | |||||||||
| Gross Profit | ( | ) | ||||||||||||
| General and administrative expenses | A | ( | ) | ( | ) | |||||||||
| Total operating expenses | ( | ) | ( | ) | ||||||||||
| Impairment of goodwill | ( | ) | ( | ) | ( | ) | ||||||||
Investment loss | A | ( | ) | ( | ) | |||||||||
| Interest expense | A | ( | ) | ( | ) | ( | ) | |||||||
| Interest income | A | ( | ) | |||||||||||
| Other income | A | |||||||||||||
| Loss on loan settlement | B | ( | ) | ( | ) | |||||||||
| Total other expenses | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes | ( | ) | ( | ) | ||||||||||
| NET LOSS | ( | ) | ( | ) | ||||||||||
| Consolidated Statements of Operations for the nine months ended September 30, 2021: | ||||||||||||||
| REVENUE | A | ( | ) | |||||||||||
| Cost of revenue | A | ( | ) | ( | ) | ( | ) | |||||||
| Gross Profit | ( | ) | ( | ) | ||||||||||
| General and administrative expenses | A | ( | ) | ( | ) | |||||||||
| Total operating expenses | ( | ) | ( | ) | ||||||||||
| Impairment of goodwill | A | ( | ) | ( | ) | |||||||||
| Investment loss | A | ( | ) | ( | ) | |||||||||
| Interest expense | A | ( | ) | ( | ) | ( | ) | |||||||
| Interest income | A | |||||||||||||
| Other income | A | |||||||||||||
| Loss on loan settlement | B | ( | ) | ( | ) | |||||||||
| Total other expenses | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes | ( | ) | ( | ) | ||||||||||
| NET LOSS | ( | ) | ( | ) |
10
| Consolidated Statement of Cash Flows for the nine months ended September 30, 2021: | ||||||||||||||
| Net loss | A,B | $ | ( | ) | $ | $ | ( | ) | ||||||
| Depreciation of property, plant and equipment | A | |||||||||||||
| Amortization of ROU assets | A | |||||||||||||
| Interest expense | A | |||||||||||||
| Investment loss | A | |||||||||||||
| Impairment of goodwill | A | ( | ) | |||||||||||
| Loss on loan settlement | B | |||||||||||||
| Change in operating assets and liabilities | ||||||||||||||
| Accounts receivable | A | ( | ) | ( | ) | |||||||||
| Deposits and prepayments | A | ( | ) | ( | ) | |||||||||
| Inventory | A | ( | ) | ( | ) | |||||||||
| Other receivable | A | ( | ) | ( | ) | |||||||||
| Other noncurrent assets | A | ( | ) | ( | ) | |||||||||
| Deferred revenue | A | |||||||||||||
| Accounts payable | A | ( | ) | |||||||||||
| Accrued liabilities and other payables | A | |||||||||||||
| Lease liabilities | A | ( | ) | ( | ) | |||||||||
| Income tax payable | ( | ) | ( | ) | ||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||||||||
| Cash flows from investing activities | ||||||||||||||
| Purchase of property, plant and equipment | A | ( | ) | ( | ) | ( | ) | |||||||
| Investment in a subsidiary | A | ( | ) | ( | ) | |||||||||
| Cash from acquisition of a subsidiary | A | ( | ) | |||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||||
| Cash flows from financing activities | ||||||||||||||
| Repayment to related parties | A | ( | ) | ( | ) | ( | ) | |||||||
| Repayment of lease liability | A | ( | ) | |||||||||||
| Proceeds from loan | ||||||||||||||
| Net cash provided by financing activities | ( | ) | ||||||||||||
| Effect on exchange rate change on cash and cash equivalents | ( | ) | ||||||||||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | ( | ) |
| (A) |
| (B) |
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NOTE － 3 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.
lBasis 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”).
The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form 10-K filed by the Company with the SEC on March 29, 2021.
lUse of estimates
In preparing these unaudited condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates.
lBasis 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.
lCash 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. As of September 30, 2021 and December 31, 2020, the Company had no cash equivalents.
lAccounts receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest, which 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 credit-worthiness and their 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. At the end of fiscal year, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all 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, 2021 and December 31, 2020, there was no allowance for doubtful accounts.
lProperty, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
| Expected useful life | ||
| Service yacht | ||
| Motor vehicle | ||
| Office equipment |
Expenditure for repairs and maintenance is expensed as incurred. When assets have 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.
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lIntangible assets, net
Intangible assets are stated at cost less accumulated amortization.
Intangible assets represented the trademark registered in the PRC and purchased software which are amortized on a straight-line basis
over a useful life of
The Company follows ASC Topic 350 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts.
lRevenue 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 the processing, distribution, and sale of its products.
lComprehensive income
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying unaudited condensed consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
lIncome 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
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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.
lForeign 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 statement of operations.
The reporting currency of the Company is United States Dollar ("US$") and the accompanying consolidated financial statements have been expressed in US$. In addition, the Company and subsidiaries are operating in PRC and Hong Kong maintain their books and record in their local currency, Renminbi (“RMB”) and Hong Kong dollars (“HK$”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statements of changes in stockholder’s equity.
Translation of amounts from RMB and HK$ into US$ has been made at the following exchange rates for the periods ended September 30, 2021 and December 31, 2020:
| September 30, 2021 | December 31, 2020 | |||||||
| Period/year-end RMB:US$ exchange rate | ||||||||
| Period/annual average RMB:US$ exchange rate | ||||||||
| Period/year-end HK$:US$ exchange rate | ||||||||
| Period/annual average HK$:US$ exchange rate | ||||||||
| Period/year-end TWD:US$ exchange rate | ||||||||
| Period/annual average TWD:US$ exchange rate | ||||||||
lLease
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.
lNoncontrolling 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 shareholders’ equity on the consolidated balance sheets and the consolidated net loss attributable to the its noncontrolling interest be clearly identified and presented on the face of the consolidated statements of operations and comprehensive loss.
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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 common shares 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 common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
lConcentrations 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 Federal Deposit Insurance Corporation’s insured limit. Balances in excess of federally 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.
lFair 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 and retention 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.
lRecent accounting pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
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 $
The continuation of the Company as a going concern through September 30, 2022 is dependent upon the continued financial support from its shareholders. Management believes the Company is currently pursuing additional financing for its operations. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recover ability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
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NOTE － 5 BUSINESS COMBINATION
On September 23, 2021, the Company completed the acquisition of 25% equity interest of Vivic Corporation (Hong Kong) Co., Limited (the “Acquisition”). The total consideration of the acquisition was $107,336.
The purchase price allocation resulted in $
| Acquired assets: | US$ | |||
| Cash and cash equivalents | $ | |||
| Prepayments | ||||
| Amount due from holding company | ||||
| Amount due from fellow subsidiary | ||||
| Less: Assumed liabilities | ||||
| Accruals | ( | ) | ||
| Amount due to related party | ( | ) | ||
| ( | ) | |||
| Fair value of net assets acquired | ||||
| Goodwill recorded | ||||
| Cash consideration allocated | $ | |||
The Acquisition was accounted for as a business combination in accordance with ASC 805 “Business Combinations”. The Company has allocated the purchase price consideration based upon the fair value of the identifiable assets acquired and liabilities assumed on the acquisition date. Management of the Company is responsible for determining the fair value of assets acquired, liabilities assumed and intangible assets identified as of the acquisition date and considered a number of factors including valuations from management estimation. Acquisition-related costs incurred for the acquisitions are not material and have been expended as incurred in general and administrative expense.
The goodwill was fully impaired during the nine months ended September 30, 2021, based on the management’s estimate.
NOTE－ 6 LONG-TERM INVESTMENT
On January 3, 2021, the Company signed an investment agreement with Shenzhen
Ocean Way Yachts Services Co., Limited (“Ocean Way”) to invest a total of $231,861 (RMB1,500,000), which is equivalent to 60%
of equity ownership. However, based on the agreements, Shaorong Zhuang, the other shareholder has the right to assign the majority of
directors in the board and controls Ocean Way. As a result, Ocean Way is treated as an investment rather than subsidiary. As of September
30, 2021, a total of $
NOTE － 7 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| Leasehold improvements | $ | $ | ||||||
| Service yacht | ||||||||
| Motor vehicle | ||||||||
| Office equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property，plant and equipment, net | $ | $ | ||||||
Depreciation expense for the three months ended September
30, 2021 and 2020 were $
Depreciation expense for the nine months ended September
30, 2021 and 2020 were $
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NOTE － 8 DEPOSITS AND PREPAYMENTS
Deposits and prepayments consisted of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| Deposits | $ | $ | ||||||
| Prepayments (a) | ||||||||
| $ | $ | |||||||
| (a) |
NOTE － 9 ACCRUED LIABILITIES AND OTHER PAYABLE
Accrued expenses and other payable consisted of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| Accrued expenses | $ | $ | ||||||
| Other payable (a) | ||||||||
| $ | $ | |||||||
| (a) |
NOTE － 10 LEASES
The Company purchased a service vehicle under a financing lease arrangement of a total amount of $18,146 (RMB117,043) starting from August 1, 2019, with the effective interest rate of 2.25% per annum, due through May 1, 2022, with principal and interest payable monthly.
The Company leases premises for offices and dock for operating under non-cancelable operating leases with initial terms of 5 years and the effective interest rate of 6% per annum. Operating lease payments are expended over the term of lease. The Company leases don’t include options to extend nor any restrictions or covenants. Under the terms of the lease agreements, the Company has no legal or contractual asset retirement obligations at the end of the lease.
Supplemental balance sheet information related to leases as of September 30, 2021 and December 31, 2020 are as follows:
| September 30, 2021 | December 31, 2020 | |||||||
| Right of use assets | $ | $ | ||||||
| Current portion | $ | $ | ||||||
| Non-current portion | ||||||||
| Total | $ | $ | ||||||
The following table summarizes the maturity of lease liabilities under operating leases as of September 30, 2021:
| For the twelve months ending September 30, | Operating Leases | |||
| 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| Thereafter | ||||
| Total lease payments | $ | |||
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NOTE － 11 PROMISSORY NOTE
Promissory note represented the U.S. Small Business Administration, an Agency of the U.S. Government authorized a loan to the Company which bears interest at the rate of 3.75% per annum and will become repayable within 30 years, from the date of draw down. This loan is secured by all tangible and intangible personal property, including, but not limited to: (a) inventory, (b) equipment, (c) instruments, (d) chattel paper, (e) receivables, (h) deposit accounts, (i) commercial tort claims and (j) general intangibles. The loan was borrowed on July 1, 2020 and the initial installment repayment date begins Twelve (12) months from the date of the promissory Note and has been extended for 30 months. As a result, the Company has not made any repayment. Total promissory note recorded in balance were $87,500 at September 30, 2021 and December 31, 2020. The accrued interest expense is $2,490 and $0 for the nine months ended September 30, 2021 and 2020, respectively.
NOTE － 12 SHAREHOLDERS’ (DEFICIT) EQUITY
Authorized Shares
The Company’s authorized shares are preferred stock and common stock with a par value of $ per share.
Preferred Stock
As of September 30, 2021 and December 31, 2020, the Company had a total of shares of preferred stock issued and outstanding.
Common Stock
On March 5, 2021, the Company issued shares of common stock to settle
a debt in the amount of $
On April 23, 2021, the Company issued shares of common stock to
settle a debt in the amount of $
On August 3, 2021, the Company issued
The market price is a fair price to record the value of stocks in the transaction.
Due to the significant difference between the market prices and conversion prices, a loss of $
As of September 30, 2021 and December 31, 2020, the Company had a total of and shares of its common stock issued and outstanding, respectively.
Basic net (loss) income per share is computed using the weighted average number of common shares outstanding during the year. The dilutive effect of potential common shares outstanding is included in diluted net (loss) income per share. The following table sets forth the computation of basic and diluted net (loss) income per share for the three and nine months ended September 30, 2021 and 2020:
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net loss for basic and diluted attributable to Vivic Corp. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common stock outstanding - Basic and Diluted | ||||||||||||||||
| Net loss per share of common stock – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
NOTE － 14 RELATED PARTY TRANSACTIONS
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 shareholders. 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 shareholders of the Company, which were unsecured, interest-free and had no fixed terms of repayments. Imputed interests from related
parties’ loan are not significant. The balance of due to related parties was $
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The Company paid $
The Company paid $
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, 2021 and December 31, 2020, the Company has no material commitments and contingencies.
NOTE － 16 SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred September 30, 2021, up through November 12, 2021 the Company presented the unaudited condensed consolidated financial statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
FORWARD-LOOKING STATEMENTS
Statements made in this Annual Report that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as"may,""will,""expect,""believe,""anticipate,""estimate,""approximate" or "continue," or the negative thereof.
We intend that such forward-looking statements be subject to the safe harbors for such statements.
We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's commercially reasonable judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and 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.
Overview
VIVIC CORP. (“VIVC”) is a corporation established under the corporation laws in the State of Nevada on February 16, 2017. Starting December 27, 2018, associated with the change of management, we expanded our business operations to include new types of marine tourism. In addition, we started making efforts to enter into the businesses of constructing marinas and constructing yachts in the mainland China under the brand of 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.
It has also developed and operates “Joy Wave”, an online yacht rental and leisure service business in Guangzhou, China. In the mainland China and Taiwan, primarily through the Internet, we provide third-party yacht and marine tourism services. This marine tourism involves high quality coastal tourism attractions 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 a yacht-sharing program system, which can provide services for more customers.
We also started to develop energy-saving yacht engines. Because it has advanced technology, it can achieve up to 50% energy efficiency. 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 a low-carbon tourism for global environmental protection.
RESULTS OF OPERATIONS
Our business has been impacted by the COVID-19 pandemic with the authorities implementation of various preventive measures including, but not limited to, travel bans and restrictions, mandatory quarantine requirements, limited business activities and operations, and shelter-in-place orders. These measures have led to, and are continuing to lead to, business slowdowns or shutdowns worldwide. The global economy and financial markets have been adversely influenced as well. Considering the features of our business in the tourism and recreation industries, the COVID-19 pandemic has caused a reduction in the demand for recreational trips and activities. Our business has been experiencing the downturn with the COVID-19 pandemic. It is expected that our business will be resumed, at least, after the abolition of the travel restrictions and mandatory quarantine requirements.
RESULTS OF OPERATIONS
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recover ability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We generated net revenue of $109,957 and $43,233 for the three months ended September 30, 2021 and 2020, respectively. We generated net revenue of $178,931 and $197,851 for the nine months ended September 30, 2021 and 2020, respectively. The decrease in net revenues was primarily because the revenue deriving from consulting services rendered on sales and marketing of yachts decreased.
The cost of revenue incurred were $42,850 and $3,870 for the three months ended September 30, 2021 and 2020, respectively. The cost of revenue incurred were $282,437 and $3,870 for the nine months ended September 30, 2021 and 2020, respectively.
The gross profits were $67,107 and $39,363 for the three months ended September 30, 2021 and 2020, respectively. The gross profits were $(103,506) and $193,981 for the nine months ended September 30, 2021 and 2020, respectively. The falling gross profit in 2021 was essentially caused by the COVID-19 pandemic, which unfavorably influenced our consulting service fee on sales and marketing of yachts.
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The general and administrative expenses incurred were $321,310 and $341,450 for the three months ended September 30, 2021 and 2020, respectively. The general and administrative expenses incurred were $763,397 and $875,825 for the nine months ended September 30, 2021 and 2020, respectively. The decrease in general and administrative expenses was primarily attributable to reclassification to cost of revenue.
Other income (expense) was $(1,325,447) and $12,737 for the nine months ended September 30, 2021 and 2020, respectively. Other income (expense) comprises of investment loss, loss on loan settlement, interest expense and interest income. Investment gain(loss) was $(54,676) and $0 for the nine months ended September 30, 2021 and 2020, respectively. The investment gain (loss) in the nine months ended September 30, 2021 was primarily due to the investment gain (loss) in long-term investment. Loss on loan settlement was $170,355 and $0 for the three months ended September 30, 2021 and 2020, respectively. Loss on loan settlement was $1,340,664 and $0 for the nine months ended September 30, 2021 and 2020, respectively.
The net loss was $374,766 and $302,322 for the three months ended September 30, 2021 and 2020, respectively. The net losses were $2,192,809 and $669,107 for the nine months ended September 30, 2021 and 2020, respectively. The increase of the net loss is primarily due to a loss on loan settlement.
LIQUIDITY AND GOING CONCERN
We had $49,015 cash and cash equivalents and working capital deficit of $242,887 as of September 30, 2021 and net loss of $2,192,809 during the nine months ended September 30, 2021. In addition, with respect to the ongoing and evolving coronavirus (COVID-19) outbreak, which was designated as a pandemic by the World Health Organization on March 11, 2020, the outbreak has caused substantial disruption in international economies and global trades and if repercussions of the outbreak are prolonged, could have a significant adverse impact on the Company’s business.
Cash Flows from Operating Activities
The net cash used in operating activities were $812,861 and $1,243,232 for the nine months ended September 30, 2021 and 2020, respectively. For nine months ended September 30, 2021, the most affected the net cash used in operating activities were the net loss $2,192,809, offset by the loss on loan settlement $1,340,664. For nine months ended September 30, 2020, the most affected the net cash used in operating activities were the net loss of $669,107, decrease in accrued liabilities and other payables of $199,324, decrease in deposits and prepayments of $172,160 and decrease in other assets of $101,327.
Cash Flows from Investing Activities
The net cash used in investing activities were $383,447 and $0 for the nine months ended September 30, 2021 and 2020, respectively. The change is primarily due to the investment in a subsidiary and purchase of property, plant and equipment for the nine months ended September 30, 2021.
Cash Flows from Financing Activities
The net cash provided by financing activities were $740,936 for the nine months ended September 30, 2021 and $976,572 for the nine months ended September 30, 2020.For the nine months ended September 30, 2021, the cash used in financing activities were repayment of related party $341,019 and the cash generated from financing activities included proceeds from loans $1,081,955. For the nine months ended September 30, 2020, the cash generated from financing activities included proceeds from issuance of common stocks $1,308,316 and the cash used in financing activities were repayment of related party $419,244.
Going Concern
The unaudited condensed consolidated financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
For the nine months ended September 30, 2021, we have not established a recurring source of revenue to sufficiently cover its operating costs in the next twelve months. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital and implement business and expansion plans. These consolidated financial statements do not include any adjustments to the recover ability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Our management believes that the current actions to obtain additional funding and implement our strategic plans provide the opportunity for us to continue as a going concern. There are no assurances that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.
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. Our working capital requirements are expected to increase in line with the growth of our business.
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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. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with business and (ii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. 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 shareholders. 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.
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 Report, there are no such arrangements. 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and 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 disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2021. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.
Changes in Internal Controls over Financial Reporting
There have been no changes in the Company's internal control over financial reporting during the last quarterly period covered by this report that have materially affected, and therefore has no significant impact on the company’s financial report nor internal control.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
Item 1A.Risk Factors
Except for the below risk factor, as of the date of this Report, there have been no material changes to the risk factors disclosed in the annual report on Form 10-K filed with the SEC on March 29, 2021. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On March 5, 2021, the Company issued 468,888 shares of common stock to settle a debt in the amount of $464,199 (equivalent to RMB3,000,000), at an agreed conversion price of $0.99 per share.
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On April 23, 2021, the Company issued 462,888 shares of common stock to settle a debt in the amount of $462,888 (equivalent to RMB3,006,111), at an agreed conversion price of $1.0 per share.
On August 3, 2021, the Company issued 154,868 shares of common stock to settle a debt in the amount of $154,868 (equivalent to RMB1,000,548), at an agreed conversion price of $1.0 per share.
The issuance of these shares is pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of1933.
None in the quarter ended September 30, 2021
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No senior securities were issued and outstanding during the nine-month period ended September 30, 2021.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to our Company.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibits:
31.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)
32.1 Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: August 15, 2022
VIVIC CORP.
/s/ Shang-Chiai Kung
___________________
By: Shang-Chiai Kung
Chief Executive Officer
/s/ Shang-Chiai Kung
___________________
By: Shang-Chiai Kung
Chief Financial Officer
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