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 authority's
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 consolidated 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 revenues from continuing operations of $106,322 and $220,947
for years ended December 31, 2022 and 2021, 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 from continuing operations incurred were $82,694 and
$366,852 for years ended December 31, 2022 and 2021, respectively.
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The gross profits were $23,628 and $(145,905) for the years ended December 31,
2022 and 2021, respectively. The rising gross profit in 2022 was mainly due to
an increase in exhibition of yachts.
The general and administrative expenses incurred were $1,199,763 and $1,186,801
for years ended December 31, 2022 and 2021, respectively. The increase in
general and administrative expenses was primarily attributable to an increase in
lease cost.
Other income (expense) was $216,480 and $(1,277,668) for year ended December 31,
2022 and 2021, respectively. Other income (expense) comprises of investment gain
(loss), loss on loan settlement, interest expense, interest income and others.
Loss on loan settlement was $2,000 and $1,340,664 for the years ended December
31, 2022 and 2021, respectively.
The net losses from continuing operations were $959,664 and $2,610,833 for the
years ended December 31, 2022 and 2021, respectively. The main reason for the
decreased losses was primarily attributable to a decrease in loss on loan
settlement.
LIQUIDITY AND GOING CONCERN
We had $163,439 cash and cash equivalents and working capital deficit of
$1,447,880 as of December 31, 2022 and net loss of $981,552 during the year
ended December 31, 2022. 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.
Net cash provided by(used in) operating activities from continuing operations
The net cash provided by (used in) operating activities from continuing
operations were $31,106 and $(894,990) for the years ended December 31, 2022 and
2021, respectively. For the year ended December 31, 2022, the most affected the
net cash provided by operating activities were the accrued liabilities and other
payables of $1,188,346 and increase in receipt in advance $903,636 offset by the
net loss $959,664 and inventory $1,465,548. For the year ended December 31,
2021, the most affected the net cash used in operating activities were the net
loss $2,610,833 offset by the loss on loan settlement of $1,340,664 and increase
in receipt in advance $204,442.
Net cash used in investing activities from continuing operations
The net cash used in investing activities from continuing operations were
$43,306 and $350,297 for the years ended December 31, 2022 and 2021,
respectively. The change is primarily attributable to the investment and
disposal of Ocean Way and purchase of PPE for the years ended December 31, 2022
and 2021.
Net cash provided by financing activities from continuing operations
The net cash provided by financing activities from continuing operations were
$117,420 for the years ended December 31, 2022 and $902,383 for the year ended
December 31, 2021. The net cash provided for these two periods was mostly
attributed from the cash proceeds from loans and issuance of common stocks. For
the year ended December 31, 2022, the cash generated from financing activities
included proceeds from loans $50,000 and proceeds from related party $112,910.
For the year ended December 31, 2021, the cash used in financing activities were
repayment of related party $179,571 and the cash generated from financing
activities included proceeds from loans $1,081,954.
Going Concern
The independent auditors' report accompanying our financial statements contain a
note expressing substantial doubt about our ability to continue as a going
concern. The 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 year ended December 31, 2022, 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.
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
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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 Annual 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 consolidated financial statements are prepared in accordance with U.S. GAAP.
The preparation of these 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 consolidated financial statements. For further information on
all of our significant accounting policies, see the "Notes to 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 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.
? Recent accounting pronouncements
In April 2019, the FASB issued ASU No. 2019-04, "Codification Improvements to
Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and
Hedging, and Topic 825, Financial Instruments" ("ASU 2019-04") which clarifies
treatment of certain credit losses. In May 2019, the FASB issued ASU No.
2019-05, "Financial Instruments - Credit Losses (Topic 326): Targeted Transition
Relief" ("ASU 2019-05") which provides an option to irrevocably elect to measure
certain individual financial assets at fair value instead of amortized cost. In
November 2019, the FASB issued ASU No. 2019- 11, "Codification Improvements to
Topic 326, Financial Instruments - Credit Losses" ("ASU 2019- 11"), which
provides guidance around how to report expected recoveries. In February 2020,
the Financial Accounting Standards Board issued ASU No. 2020-02, "Financial
Instruments - Credit Losses" (Topic 326) ("ASU 2020-02") which provides updated
guidance on how an entity should measure credit losses on financial instruments
and delayed the effective date of the original pronouncement for smaller
reporting companies. ASU 2016- 13, ASU 2018- 19, ASU 2019-04, ASU 2019-05, ASU
2019- 11 and ASU 2020-02 (collectively, "ASC 326") are effective for public
entities for fiscal years beginning after December 15, 2019, with early adoption
permitted. The adoption of ASC 326 did not have a material impact on the
Company's recognition of financial instruments within the scope of the standard.
In December 2019, the FASB issued ASU No 2019- 12, "Income Taxes (Topic 740):
Simplifying the Accounting for Income Taxes" ("ASU 2019- 12"). ASU 2019- 12
removes certain exceptions to the general principles in Topic 740 in Generally
Accepted Accounting Principles. ASU 2019- 12 is effective for public entities
for fiscal years beginning after December 15, 2020, with early adoption
permitted. The Company does not expect ASU 2019- 12 to have a material effect on
the Company's current financial position, results of operations or financial
statement disclosures.
In March 2020, the FASB issued ASU 2020-03, "Codification Improvements to
Financial Instruments" ("ASU 2020-03"). ASU 2020-03 improves and clarifies
various financial instruments topics. ASU 2020-03 includes seven different
issues that describe the areas of improvement and the related amendments to
GAAP, intended to make the standards easier to understand and apply by
eliminating inconsistencies and providing clarifications. The Company adopted
ASU 2020-03 upon issuance, which did not have a material effect on the Company's
current financial position, results of operations or financial statement
disclosures
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In March 2020, the FASB issued ASU No 2020-04, "Reference Rate Reform (Topic
848): Facilitation of the Effects of Reference Rate Reform on Financial
Reporting" ("ASU 2020-04"). ASU 2020-04 provides temporary optional expedients
and exceptions to the US GAAP guidance on contract modifications and hedge
accounting to ease the financial reporting burdens related to the expected
market transition from the London Interbank Offered Rate (LIBOR) and other
interbank offered rates to alternative reference rates. ASU 2020-04 is effective
beginning on March 12, 2020, and the Company may elect to apply the amendments
prospectively through December 31, 2022. The Company does not expect ASU 2020-04
to have a material effect on the Company's current financial position, results
of operations or financial statement disclosures.
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