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VIVC Vivic

Filed: 12 Aug 21, 11:43am

 

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-Q

 

Mark One

 

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

 

For the quarterly period ended June 30, 2021

 

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

 

For the transition period from ______ to _______

 

Commission file # 333-219148

 

VIVIC CORP.

 (Exact name of registrant as specified in its charter)

 

 

 

 

Nevada

7999

98-1353606

State or Other Jurisdiction of

Incorporation or Organization)

(Primary Standard Industrial

Classification Number)

(IRS Employer

Identification Number)

 

187 E Warm Springs Rd., PMB#B450

Las Vegas, NV 89119

Tel: 702-899-0818

(Address and telephone number of registrant's executive office)     

 

 

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.   Yes [X]   No [  ]

 

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 [  ]Non-accelerated filer [ X ]Accelerated filer [   ]  

Smaller reporting company [ X ] Emerging growth company [ X ] 

 

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 checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X ]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized; 832,000 shares issued and outstanding as of August 3, 2021

 

Common stock, $0.001 par value; 70,000,000 shares authorized; 25,401,942 shares issued and outstanding as of August 3, 2021

 

 


1


 

Table of Contents

 

ITEM 1

Financial Statements (Unaudited)

 

ITEM 2   

Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

 

ITEM 3  

Quantitative And Qualitative Disclosures About Market Risk

 

ITEM 4

Controls And Procedures

 

 

 

PART II OTHER INFORMATION

 

ITEM 1   

Legal Proceedings

 

ITEM 2 

Unregistered Sales Of Equity Securities And Use Of Proceeds

 

ITEM 3   

Defaults Upon Senior Securities

 

ITEM 4      

Mine Safety Disclosures

 

ITEM 5  

Other Information

 

ITEM 6

Exhibits

 

 

Signatures

 


2


 

ITEM 1. FINANCIAL STATEMENTS

 

 

 

VIVIC CORP.

 

 

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

(UNAUDITED)

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020

 

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months ended June 30, 2021 and 2020

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three and Six Months ended June 30, 2021 and 2020

 

 

 

 

 

Condensed Consolidated Statement of Changes in Shareholders’ Deficit for the Three and Six Months ended June 30, 2021 and 2020

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

 

 

 

 


3


VIVIC CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

 

June 30, 2021

 

December 31, 2020

 

(Unaudited)

 

(Audited)

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

148,630

 

$

504,179

Accounts receivable

 

16,006

 

 

-

Deposits and prepayments

 

481,565

 

 

77,213

Other receivables

 

86,701

 

 

54,018

 

 

 

 

 

 

Total current assets

 

732,902

 

 

635,410

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

Property, plant and equipment, net

 

246,246

 

 

246,275

 

 

 

 

 

 

TOTAL ASSETS

$

979,148

 

$

881,685

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

41,835

 

$

12,473

Accrued liabilities and other payables

 

817,162

 

 

70,377

Amounts due to related parties

 

247,401

 

 

523,465

Current portion of lease liability

 

6,267

 

 

5,924

Income tax payable

 

29,675

 

 

29,675

 

 

 

 

 

 

Total current liabilities

 

1,142,340

 

 

641,914

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

Lease liability

 

969

 

 

4,261

Promissory note

 

87,500

 

 

87,500

 

 

 

 

 

 

Total non-current liabilities

 

88,469

 

 

91,761

 

 

 

 

 

 

TOTAL LIABILITIES

 

1,230,809

 

 

733,675

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

-

 

 

 

 

 

 

Shareholders’ (deficit) equity

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized; 832,000 and 832,000 shares issued and outstanding as of June 30, 2021 and December 31, 2020

 

832

 

 

832

Common stock, $0.001 par value; 70,000,000 shares authorized; 25,401,942 and 24,470,166 shares issued and outstanding as of June 30, 2021 and December 31, 2020

 

25,402

 

 

24,470

Common stock to be issued

 

720,000

 

 

-

Additional paid-in capital

 

2,267,310

 

 

1,341,155

Accumulated other comprehensive income (loss)

 

14,681

 

 

(2,240)

Accumulated deficits

 

(2,999,310)

 

 

(1,300,505)

 

 

 

 

 

 

Total Vivic Corp. shareholders’ equity

 

28,915

 

 

63,712

Non-controlling interest

 

(280,576)

 

 

84,298

 

 

 

 

 

 

Total shareholders’ (deficit) equity

 

(251,661)

 

 

148,010

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY

$

979,148

 

$

881,685

 

See accompanying notes to condensed consolidated financial statements.


4


VIVIC CORP.

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE LOSS

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

$

99,821

 

$

42,741

 

$

119,015

 

$

154,618

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

(136,388)

 

 

5,158

 

 

(144,400)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Gross (loss) profit

 

(36,567)

 

 

47,899

 

 

(25,385)

 

 

154,618

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

$

(353,480)

 

$

(358,394)

 

$

(633,336)

 

 

(534,741)

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

(353,480)

 

 

(358,394)

 

 

(633,336)

 

 

(534,741)

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(390,047)

 

 

(310,495)

 

 

(658,721)

 

 

(380,123)

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 Impairment of goodwill

 

-

 

 

-

 

 

(1,126,324)

 

 

-

 Interest income

 

60

 

 

44

 

 

111

 

 

61

 Interest expense

 

(302)

 

 

(350)

 

 

(1,339)

 

 

(740)

 Other (expense) income

 

(40)

 

 

13,651

 

 

-

 

 

13,651

 Exchange gain, net

 

-

 

 

366

 

 

-

 

 

366

 

 

 

 

 

 

 

 

 

 

 

 

Total other income (expense)

 

(282)

 

 

13,711

 

 

(1,127,552)

 

 

13,338

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(390,329)

 

 

(296,784)

 

 

(1,786,273)

 

 

(366,785)

 

 

 

 

 

 

 

 

 

 

 

 

Income taxe expense

 

-

 

 

9,329

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

(390,329)

 

 

(287,455)

 

 

(1,786,273)

 

 

(366,785)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to non-controlling interest

 

(57,453)

 

 

(7,320)

 

 

(87,468)

 

 

(13,785)

 

Net loss attributable to Vivic Corp.

$

(332,876)

 

$

(280,135)

 

$

(1,698,805)

 

 

$

(353,000)

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

(249)

 

 

(7,746)

 

 

16,921

 

 

(3,057)

 

 

 

 

 

 

 

 

 

 

 

 

COMRPEHENSIVE LOSS

$

(333,125)

 

$

(287,881)

 

$

(1,681,884)

 

$

(356,057)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share – Basic and Diluted

$

(0,02)

 

$

(0.01)

 

$

(0.07)

 

$

(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

– Basic and Diluted

 

25,288,792

 

 

31,793,138

 

 

24,947,162

 

 

32,078,169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.


5


VIVIC CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

 

 

Six months ended June 30,

 

 

2021

 

2020

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(1,786,273)

 

$

(366,785)

Adjustments to reconcile net loss to net cash used in from operating activities

 

 

 

 

 

 

Depreciation of property, plant and equipment

 

 

20,915

 

 

18,489

Impairment of goodwill

 

 

1,126,324

 

 

-

 

 

 

 

 

 

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(16,006)

 

 

(34,000)

Deposits and prepayments

 

 

(320,130)

 

 

(64,749)

Other receivables

 

 

(62,796)

 

 

(10,613)

Accounts payable

 

 

25,741

 

 

709

Deferred revenue

 

 

-

 

 

(20,335)

Accrued liabilities and other payables

 

 

33,916

 

 

(204,292)

Income tax payable

 

 

-

 

 

(9,031)

 

 

 

 

 

 

 

Net cash used in operating activities

 

 

(978,309)

 

 

(690,607)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Cash from acquisition of a subsidiary

 

 

5,203

 

 

-

Payment to acquire property, plant and equipment

 

 

(18,169)

 

 

-

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

(12,966)

 

 

-

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

(Repayment to) advances from related parties

 

 

(276,064)

 

 

348,287

Proceeds from issuance of common and preferred stocks

 

 

927,087

 

 

-

Repayment of lease liability

 

 

(3,064)

 

 

(2,511)

 

 

 

 

 

 

 

Net cash generated from financing activities

 

 

647,959

 

 

345,776

 

 

 

 

 

 

 

Effect on exchange rate change on cash and cash equivalents

 

 

(12,233)

 

 

(2,340)

 

 

 

 

 

 

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

(355,549)

 

 

(347,171)

 

 

 

 

 

 

 

BEGINNING OF PERIOD

 

 

504,179

 

 

562,503

 

 

 

 

 

 

 

END OF PERIOD

 

$

148,630

 

$

215,332

 

 

 

 

 

 

 

Supplemental Cash Flows Information:

 

 

 

Cash paid for interest

 

$

1,339

 

$

740

Cash paid for tax

 

$

-

 

$

9,031

 

 

 

 

 

 

 

Supplemental Disclosure of Non Cash Flows Information:

 

 

 

Conversion of debt to common stock to be issued

 

$

720,000

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.


6



VIVIC CORP.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ (DEFICIT)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

 

 

 

Three months ended June 30, 2021

 

 

 

 

 

 

 

 

Equity attributable to VIVIC Corp. shareholders

 

 

 

 

 

 

 

Preferred stock

 

 

Common stock

 

Common stock to be issued

 

Additional paid-in capital

 

Accumulated other comprehensive (loss) income

 

 

Accumulated

deficits

 

Noncontrolling interests

 

 

Total

shareholders’

(deficit) equity

 

No. of shares

 

Amount

 

No. of shares

 

Amount

 

No. of shares

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of April 1, 2021

 

832,000

 

$

832

 

24,939,054

 

$

24,939

 

300,000

 

$

720,000

 

$

1,804,885

 

$

14,930

 

$

(2,666,434)

 

$

(223,123)

 

$

(323,971)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for loan repayment

 

-

 

 

-

 

 

462,888

 

 

463

 

 

 

 

 

 

 

462,425

 

 

-

 

 

-

 

 

-

 

 

462,888

Foreign currency translation adjustment

 

-

 

 

-

 

 

-

 

 

-

 

-

 

 

-

 

 

-

 

 

(249)

 

 

-

 

 

-

 

 

(249)

Net loss for the period

 

-

 

 

-

 

-

 

 

-

 

-

 

 

-

 

 

-

 

 

-

 

 

(332,876)

 

 

(57,453)

 

 

(390,329)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2021

 

832,000

 

$

832

 

25,401,942

 

$

25,402

 

300,000

 

$

720,000

 

$

2,267,310

 

$

14,681

 

$

(2,999,310)

 

$

(280,576)

 

$

(251,661)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended June 30, 2020

 

 

 

 

 

 

 

 

Equity attributable to VIVIC Corp. shareholders

 

 

 

 

 

 

 

Preferred stock

 

 

Common stock

 

Common stock to be issued

 

Additional paid-in capital

 

Accumulated other comprehensive (loss) income

 

 

Accumulated

deficits

 

Noncontrolling interests

 

 

Total

shareholders’

(deficit) equity

 

No. of shares

 

Amount

 

No. of shares

 

Amount

 

No. of shares

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of April 1, 2020

 

832,000

 

$

832

 

32,363,200

 

$

32,363

 

-

 

$

-

 

$

24,946

 

$

3,370

 

$

(417,653)

 

$

109,640

 

$

(246,502)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellation of shares

 

-

 

 

-

 

(19,512,441)

 

 

(19,512)

 

-

 

 

-

 

 

19,512

 

 

-

 

 

-

 

 

-

 

 

-

Foreign currency translation adjustment

 

-

 

 

-

 

 

-

 

 

-

 

-

 

 

-

 

 

-

 

 

(7,746)

 

 

-

 

 

-

 

 

(7,746)

Net loss for the period

 

-

 

 

-

 

-

 

 

-

 

-

 

 

-

 

 

-

 

 

-

 

 

(280,135))

 

 

(7,320)

 

 

(287,455)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2020

 

832,000

 

$

832

 

12,850,759

 

$

12,851

 

-

 

$

-

 

$

44,458

 

$

(4,376)

 

$

(697,788)

 

$

102,320

 

$

(541,703)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


5



 

 

 

Six months ended June 30, 2021

 

 

 

 

 

 

 

 

Equity attributable to VIVIC Corp. shareholders

 

 

 

 

 

 

 

Preferred stock

 

 

Common stock

 

Common stock to be issued

 

Additional paid-in capital

 

Accumulated other comprehensive (loss) income

 

 

Accumulated

deficits

 

Noncontrolling interests

 

 

Total

shareholders’

(deficit) equity

 

No. of shares

 

Amount

 

No. of shares

 

Amount

 

No. of shares

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2021

 

832,000

 

$

832

 

 

24,470,166

 

$

24,470

 

-

 

$

-

 

$

1,341,155

 

$

(2,240)

 

$

(1,300,505)

 

$

84,298

 

$

148,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for loan repayment

 

-

 

 

-

 

 

931,776

 

 

932

 

 

 

 

 

 

 

926,155

 

 

-

 

 

-

 

 

-

 

 

927,087

Acquisition of subsidiary

 

-

 

 

-

 

-

 

 

-

 

300,000

 

 

720,000

 

 

-

 

 

-

 

 

-

 

 

(277,406)

 

 

442,594

Foreign currency translation adjustment

 

-

 

 

-

 

 

-

 

 

-

 

-

 

 

-

 

 

-

 

 

16,921

 

 

-

 

 

-

 

 

16,921

Net loss for the period

 

-

 

 

-

 

-

 

 

-

 

-

 

 

-

 

 

-

 

 

-

 

 

(1,698,805)

 

 

(87,468)

 

 

(1,786,273)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2021

 

832,000

 

$

832

 

25,401,942

 

$

25,402

 

300,000

 

$

720,000

 

$

2,267,310

 

$

14,681

 

$

(2,999,310)

 

$

(280,576)

 

$

(251,661)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2020

 

 

 

 

 

 

 

 

Equity attributable to VIVIC Corp. shareholders

 

 

 

 

 

 

 

Preferred stock

 

 

Common stock

 

Common stock to be issued

 

Additional paid-in capital

 

Accumulated other comprehensive (loss) income

 

 

Accumulated

deficits

 

Noncontrolling interests

 

 

Total

shareholders’

(deficit) equity

 

No. of shares

 

Amount

 

No. of shares

 

Amount

 

No. of shares

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2020

 

832,000

 

$

832

 

32,363,200

 

$

32,363

 

-

 

$

-

 

$

24,946

 

$

(1,319)

 

$

(344,788)

 

$

116,105

 

$

(171,861)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellation of shares

 

-

 

 

-

 

(19,512,441)

 

 

(19,512)

 

-

 

 

-

 

 

19,512

 

 

-

 

 

-

 

 

-

 

 

-

Foreign currency translation adjustment

 

-

 

 

-

 

 

-

 

 

-

 

-

 

 

-

 

 

-

 

 

(3,057)

 

 

-

 

 

-

 

 

(3,057)

Net loss for the period

 

-

 

 

-

 

-

 

 

-

 

-

 

 

-

 

 

-

 

 

-

 

 

(353,000)

 

 

(13,785)

 

 

(366,785)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2020

 

832,000

 

$

832

 

12,850,759

 

$

12,851

 

-

 

$

-

 

$

44,458

 

$

(4,376)

 

$

(697,788)

 

$

102,320

 

$

(541,703)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.


6



VIVIC CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

NOTE-1BASIS OF PRESENTATION 

 

The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

 

In the opinion of management, the consolidated balance sheet as of December 31, 2020 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended June 30, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2021 or for any future period.

 

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2020.

 

 

NOTE-2ORGANIZATION 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.

 

The Company 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 acquire 60% of Shenzhen Ocean Way Yachts Services Co., Ltd and its subsidiaries.

 

On May 11, 2021, the Company’s subsidiary namely Guangzhou Khashing Yacht Company Limited ceased its operation and de-registered.

 

On July 13, 2021, the Company’s subsidiary namely Shenzhen Cheng Tou Yacht Development Co., Ltd ceased its operation and de-registered.


7



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

 

75%

 

 

 

 

 

 

 

 

 

Vivic Corporation (Fujian) Co., Limited

 

The People’s Republic of China

 

Tourism consultancy service

 

Registered:

RMB 10,000,000

Paid up: RMB0

 

75%

 

 

 

 

 

 

 

 

 

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: RMB795,000

(2020: RMB550,000)

 

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%

 

 

 

 

 

 

 

 

 

Khashing Yachts Industry (Hainan) Limited

 

The People’s Republic of China

 

Tourism consultancy service and provision of yacht service

 

Registered: USD10,000,000

Paid up: USD0

 

60%

 

 

 

 

 

 

 

 

 

Shenzhen Ocean Way Yachts Services Co., Ltd.

 

The People’s Republic of China

 

Tourism consultancy service and provision of advertising service

 

Registered: RMB2,500,000

Paid up: RMB1,780,000

 

60%

 

 

 

 

 

 

 

 

 

Shenzhen LANBO Yacht Co., Ltd

 

The People’s Republic of China

 

Provision of internet technology development service

 

Registered: RMB100,000

Paid up: RMB100,000

 

39%

 

 

 

 

 

 

 

 

 

Jiahai Yacht (Hainan) Co., Ltd

 

The People’s Republic of China

 

Provision of yacht service

 

Registered: RMB10,000,000

Paid up: RMB1,000

 

59%

 

 

 

 

 

 

 

 

 

Shenzhen Cheng Tou Yacht  Development Co., Ltd

 

The People’s Republic of China

 

Provision of yacht service

 

Registered: RMB5,000,000

Paid up: RMB0

 

12%

 

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

 

 

NOTE-3SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

 

The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.

 

lUse of estimates 


8



In preparing these 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.

 

lRisks and Uncertainties 

 

(1)The Company’s auditors have issued a going concern opinion. This means that there is substantial doubt that the Company can continue as an ongoing business for the next twelve months if the Company does not generate more revenues or obtain more funds for its business operations. There is no assurance that the Company can generate more revenues or obtain more investments.  

 

(2)The Company faces strong competition from well-established companies and small independent companies. The Company will be at a competitive disadvantage in obtaining the facilities, employees, financing and other resources required to provide its services and products to customers. The Company’s opportunity to obtain customers may be limited by its financial resources and other assets.   

 

(3)The Company relies on the health and growth of the tourism industry. Tourism is highly sensitive to business and personal discretionary spending levels, and thus tends to decline during general economic downturns. In addition, other adverse trends or events that tend to reduce tourism are likely to reduce our revenues. Also, due to the nature of its business, the Company may be subject to liability claims arising out of accidents or disasters causing injury to its customers, including claims for serious personal injury or death. There can be no assurance that the Company will be able to obtain sufficient insurance coverage at acceptable premium levels in the future. Successful assertion against one or a series of large uninsured claims, or of one or a series of claims exceeding our insurance, could adversely affect its business, financial condition and results of operations.   

 

(4)The Company has a trademark in China and will continue the process of applying trademarks in Taiwan and US.  There is no assurance that the trademark registration can be obtained timely. 

 

(5)The Company is unable to afford establishing an audit committee due to limited operations and lack of revenue. 

 

(6)As a Nevada corporation, the Company plans to be able to carry out business in the United States eventually. However, currently we don’t have any substantial asset in the U.S. and we may not be able to own any substantial asset in the near future. Lack of substantial assets will make it difficult for us to launch business operations and cause delay to the execution of our business plans in the U.S. 

 

(7)The Company has not used a private placement memorandum, a registered stock offering or any other type of formal disclosure connected with prior sales of securities.  Therefore, there is risk that investors might seek to reverse prior purchase transactions and ask for a return of their money. 

 

lBasis of consolidation 

 

The 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.

 

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 collectibility. 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


9



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 June 30, 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

 

10 years

 

 

Motor vehicle

 

5 years

 

 

Office equipment

 

5 years

 

 

 

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.

 

lRevenue recognition 

 

Under ASU 2014-09, the Company recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

 

The Company derives its revenues from the sale and rendering of yacht services and recognizes in full upon completion of delivery to the receiver’s location or services to the customers. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

 

 

identify the contract with a customer;

identify the performance obligations in the contract;

determine the transaction price;

allocate the transaction price to performance obligations in the contract; and

recognize revenue as the performance obligation is satisfied.

 

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 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 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.


10



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 period ended June 30, 2021 and year ended December 31, 2020:

 

 

June 30, 2021

 

December 31, 2020

Period/year-end RMB:US$ exchange rate

6.4549

 

6.5276

Period/annual average RMB:US$ exchange rate

6.4697

 

6.9001

Period/year-end HK$:US$ exchange rate

7.7512

 

7.7525

Period/annual average HK$:US$ exchange rate

7.7610

 

7.7557

Period/year-end TWD:US$ exchange rate

27.8808

 

28.0772

Period/annual average TWD:US$ exchange rate

28.0113

 

29.4418

 

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.

 

lNet 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


11



common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

 

lRelated parties 

 

Parties, which can be a corporation 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.

 

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 model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; 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 

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. In November 2018, the FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2018-19”) which clarifies that receivables arising from operating leases are accounted for using lease guidance and not as financial instruments. 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


12



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 January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which eliminates step two from the goodwill impairment test and instead requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and should be adopted on a prospective basis. The adoption of ASU 2017-04 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

 

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The adoption of ASU 2018-13 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

 

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.

 

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.

 

 

NOTE-4GOING CONCERN UNCERTAINTIES 

 

The accompanying 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 has suffered from net loss of $1,786,273 during the six months ended June 30, 2021. Also, at June 30, 2021, the Company has incurred the accumulated deficits of $2,999,310 and working capital deficit of $409,438. 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.

 

The continuation of the Company as a going concern through the next twelve months 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.


13



These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements 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.

 

 

NOTE-5BUSINESS COMBINATION 

 

On January 3, 2021, the Company  acquired 60% of the equity ownership of Shenzhen Ocean Way Yachts Services Co., Limited including all of its Subsidiaries (collectively “Ocean Way Group”) (the “Acquisition”) under the Share Transfer and Investment Agreement (“Agreement”) entered in January 3, 2021 between Guangdong Khashing, Ocean Way and Zhuang Shaorong, its 100% shareholder (“Transferor”). Under the Agreement, Transferor shall transfer to the Company 60% of the total ownership of Ocean Way in exchange for our 300,000 shares of common stock based on the current market price of $2.40 per share at grant date, approximately $720,000, and the shares will be delivered to the Transferor in three consecutive annual tranches, 100,000 shares each tranche.

 

In addition, the Company shall pay USD18,301 (equivalent to RMB 120,000) per month to Ocean Way as additional working capital for three consecutive years following the transfer of the equity ownership (“Working Capital Investment”).  If Ocean Way generates profits in consecutive six months, the Company may cease to pay the additional working capital.  At the conclusion of the three years, Ocean Way will carry out an appraisal of its total valuation (“Anticipated Valuation”) and in the event that the portion of the Anticipated Valuation attributed to Guangdong Khashing exceeds the Working Capital Investment, Guangdong Khashing shall pay the difference to the Transferor.

 

The purchase price allocation resulted in $1,126,324 of goodwill, as below:

 

Acquired assets:

 

US$

 

Cash and cash equivalents

 

$

5,203

 

Prepayments

 

 

84,222

 

Plant and equipment

 

 

313

 

 

 

 

89,738

 

 

 

 

 

 

Less: Assumed liabilities

 

 

 

 

Accounts payable

 

 

(10,308)

 

Accrued liabilities and other payables

 

 

(743,498)

 

 

 

 

(753,806)

 

 

 

 

 

 

Fair value of net assets acquired

 

 

(664,068)

 

Non-controlling interest

 

 

277,406

 

Exchange difference

 

 

(19,662)

 

Goodwill recorded

 

 

1,126,324

 

 

 

 

 

 

Cash consideration allocated

 

$

720,000

 

 

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 expensed as incurred in general and administrative expense.

 

The goodwill is fully impaired during the period ended June 30, 2021, based on the management’s estimate.


14



NOTE-6PROPERTY, PLANT AND EQUIPMENT 

 

Property, plant and equipment consisted of the following:

 

 

June 30, 2021

 

December 31, 2020

 

 

 

(Audited)

At cost:

 

 

 

 

 

Service yacht

$

382,688

 

$

378,421

Motor vehicle

 

19,605

 

 

19,386

Office equipment

 

21,109

 

 

2,921

 

 

423,402

 

 

400,728

Less: accumulated depreciation

 

(177,156)

 

 

(154,453)

 

$

246,246

 

 

$

246,275

 

Depreciation expense for the three months ended June 30, 2021 and 2020 were $10,779 and $9,195, respectively.

 

Depreciation expense for the six months ended June 30, 2021 and 2020 were $20,915 and $18,489, respectively.

 

 

NOTE-7DEPOSITS AND PREPAYMENTS 

 

Deposits and prepayments consisted of the following:

 

 

June 30, 2021

 

December 31, 2020

 

 

 

(Audited)

 

 

 

 

 

 

Deposits

$

35,925

 

$

77,213

Prepayments (a)

 

445,640

 

 

-

 

 

 

 

 

 

 

$

481,565

 

$

77,213

 

 

 

 

 

 

(a)The amount will be recognized as expenses in the next twelve months. 

 

 

NOTE-8ACCRUED LIABILITIES AND OTHER PAYABLE 

 

Accrued expenses and other payable consisted of the following:

 

 

June 30, 2021

 

December 31, 2020

 

 

 

(Audited)

 

 

 

 

 

 

Accrued expenses

$

11,734

 

$

30,343

Receipt in advance

 

7,658

 

 

-

Other payable (a)

 

797,770

 

 

70,377

 

 

 

 

 

 

 

$

817,162

 

$

100,720

 

(a)The amount will be settled in the next twelve months. 

 

 

NOTE-9AMOUNTS DUE TO RELATED PARTIES 

 

The amounts 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.


15



NOTE-10LEASE LIABILITY 

 

The Company purchased a service vehicle under a financing lease arrangement with the effective interest rate of 2.25% per annum, due through August 30, 2022, with principal and interest payable monthly. The lease liability is as follows:

 

Right of use assets and Lease liability – right of use are as follows:

 

 

June 30, 2021

 

December 31, 2020

 

 

 

 

(Audited)

 

 

 

 

 

 

Right of use assets

$

7,236

 

$

10,185

 

 

 

 

 

 

Current portion

$

6,267

 

$

5,924

Non-current portion

 

969

 

 

4,261

 

 

 

 

 

 

Total

$

7,236

 

$

10,185

 

The lease liability – right of use is as follows:

 

 

June 30, 2021

 

December 31, 2020

 

 

 

 

(Audited)

 

 

 

 

 

 

Current portion

$

6,267

 

$

5,924

Non-current portion

 

969

 

 

4,261

 

 

 

 

 

 

Total

$

7,236

 

$

10,185

 

As of June 30, 2021, the maturities of the lease liability – right of use which have initial or remaining lease terms in excess of one year consist of the following:

 

Year ending June 30:

 

 

 

 

 

 

2022

 

 

 

 

$

7,111

2023

 

 

 

 

 

919

 

 

 

 

 

 

 

Total:

 

 

 

 

$

8,030

 

 

NOTE-11PROMISSORY 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 drawdown. 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.

 

 

NOTE-12INCOME TAXES 

 

The Company has operations in various countries and is subject to tax in the jurisdictions in which they operate, as follows:

 

United States of America

 

VIVC is registered in the State of Delaware and is subject to US federal corporate income tax. The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in its income tax provision. The Company has not accrued or paid interest or penalties which were not material to its results of operations for the periods presented.


16



For the period ended June 30, 2021 and 2020, the Company did not have any interest and penalties associated with tax positions. As of June 30, 2021 and December 31, 2020, the Company has accrued penalties on uncertain tax positions amounting to $25,000 and $25,000, respectively,

 

The reconciliation of income tax rate to the effective income tax rate based on loss before income taxes for the six months ended June 30, 2021 and 2020 are as follows:

 

 

 

Six months ended June 30,

 

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

$

(75,382)

 

$

(181,230)

 

Statutory income tax rate

 

 

21%

 

 

21%

 

Income tax expense at statutory rate

 

 

(15,830)

 

 

(38,058)

 

Tax effect of allowance

 

 

15,830

 

 

38,058

 

 

Income tax expense

 

$

-

 

$

-

 

 

Taiwan

 

The Company’s Taiwan branch operating in Taiwan is subject to the Taiwan Profits Tax at the income tax rates ranging from 20% on the assessable income arising in Taiwan during its tax year. The operation in Taiwan incurred an operating loss and there is no provision for income tax for the six months ended June 30, 2021 and 2020.

 

Hong Kong

 

The Company’s subsidiary operating in Hong Kong is subject to the Hong Kong Profits Tax at the tax rates ranging from 8.25% to 16.5% on the assessable income arising in Hong Kong during its tax year.  The operation in Hong Kong incurred an operating loss and there is no provision for income tax for the six months ended June 30, 2021 and 2020.

 

The People’s Republic of China

 

The Company’s subsidiary operating in The People’s Republic of China (“PRC) is subject to the PRC Income Tax at the unified rate of 25% on the assessable income arising in PRC during its tax year.

 

The reconciliation of income tax rate to the effective income tax rate based on loss before income taxes for the six months ended June 30, 2021 and 2020 are as follows:

 

 

 

Six months ended June 30,

 

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

$

(1,627,183)

 

$

(88,105)

 

Statutory income tax rate

 

 

25%

 

 

25%

 

Income tax expense at statutory rate

 

 

(406,796)

 

 

(22,026)

 

Net operating loss

 

 

406,796

 

 

22,026

 

 

Income tax expense

 

$

-

 

$

-

 


17



The following table sets forth the significant components of the deferred tax assets and liabilities of the Company as of June 30, 2021 and December 31, 2020:

 

 

 

June 30, 2020

 

December 31, 2019

 

 

 

(Unaudited)

 

(Audited)

 

Deferred tax assets on

 

 

 

 

 

 

 

Net operating loss carryforwards:

 

 

 

 

 

 

 

-United States 

 

$

15,830

 

$

106,222

 

-Taiwan 

 

 

7,439

 

 

28,004

 

-Hong Kong 

 

 

7,674

 

 

11,691

 

-PRC 

 

 

406,796

 

 

61,467

 

-

 

 

437,739

 

 

207,384

 

Less: valuation allowance

 

��

(437,739)

 

 

(207,384)

 

 

Deferred tax assets, net

 

$

-

 

$

-

 

 

As of June 30, 2021, the operations in incurred $1,786,273 of cumulative net operating losses which can be carried forward to offset future taxable income. There is no expiry in net operating loss carryforwards. The Company has provided for a full valuation allowance against the deferred tax assets of $437,739 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

 

NOTE-13SHAREHOLDERS’ DEFICIT 

 

Authorized Shares

 

The Company’s authorized shares are 5,000,000 preferred shares and 70,000,000 common shares with a par value of $0.001 per share.

 

Preferred Shares

 

As of June 30, 2021 and December 31, 2020, the Company had a total of 832,000 and 832,000 shares of its preferred stock issued and outstanding, respectively.

 

Common Shares

 

On March 5, 2021, the Company converted a debt in the amount of $464,199 (equivalent to RMB3,000,000) (“Debt”), which was owed to Yufei Zeng, into shares of common stock, at the conversion price of $0.99 per share and issued 468,888 shares of common stock to Yufei Zeng accordingly.

 

On April 23, 2021, the Company converted a debt in the amount of $462,888 (equivalent to RMB3,006,111) (“Debt”), which was owed to Shunji Kuang, into shares of common stock, at the conversion price of $1 per share and issued 462,888 shares of common stock to Shunji Kuang accordingly.

 

As of June 30, 2021 and December 31, 2020, the Company had a total of 25,401,942 and 24,470,166 shares of its common stock issued and outstanding, respectively.

 

 

NOTE-14RELATED 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.

 

The Company paid $9,000 and $18,000 consulting fee to Honetech Inc., its controlling shareholder during the six months ended June 30, 2021 and 2020, respectively.

 

The Company paid $0 and $30,000 consulting fee to Continental Development Corporation., its related party during the six months ended June 30, 2021 and 2020, respectively.


18



The Company paid $46,003 and $200,000 consulting fee to Go Right Holdings Limited., its related party during the six months ended June 30, 2021 and 2020, respectively.

 

The Company paid $74,680 and $55,812 salaries to certain shareholders during the six months ended June 30, 2021 and 2020, respectively.

 

Apart from the transactions and balances detailed elsewhere in these accompanying condensed consolidated financial statements, the Company has no other significant or material related party transactions during the periods presented.

 

 

NOTE-15COMMITMENTS AND CONTINGENCIES 

 

As of June 30, 2021, the Company has no material commitments and contingencies.

 

 

NOTE-16SUBSEQUENT 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 June 30, 2021, up through August 12, 2021 the Company presented the condensed consolidated financial statements.

 

 

 

 

 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

FORWARD LOOKING STATEMENTS

 

Statements made in this Form 10-Q 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 best 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.

 

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 recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

We generated net revenues of $99,821 and $42,741 for the three months ended June 30, 2021 and 2020 respectively.  The net revenues generated for the six months ended June 30, 2021 and 2020 were $119,015 and $154,618 respectively.   

 

The net loss was $390,329 and $287,455 for the three months ended June 30, 2021 and 2020 respectively.  The net loss was $1,786,273 and $366,785 for the six months ended June 30, 2021 and 2020 respectively.  The main reason for the increased losses was the impairment of goodwill incurred during the six months ended June 30, 2021 and the increased general and administrative expenses.


19



The general and administrative expenses incurred for the three months ended June 30, 2021 and 2020 were $353,480 and $358,394 respectively.  The general and administrative expenses incurred for the six months ended June 30, 2021 and 2020 were $633,336 and $534,741 respectively.  The fundamental reasons for the rise in the general and administrative expenses were that the company expanded its operations with increased legal fee, consultancy fee on business planning and projects, and staffing when comparing the same period between 2021 and 2020.  General and administrative expenses were basically the business expenses and corporate overhead.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2021 and December 31, 2020, our total assets were $979,148 and $881,685 respectively.  The fall in total assets was primarily caused by the decreased cash and cash equivalent.   As of June 30, 2021 and December 31, 2020, our total liabilities were $1,230,809 and $733,675 respectively.  The accumulated deficits were $2,999,310 as of June 30, 2021, compared it as of December 31, 2020, accumulated deficits were $1,300,505.  The increase in the accumulated deficits was basically caused by the impairment of goodwill incurred during the six months ended June 30, 2021 and the increased general and administrative expenses. The total liabilities and shareholders’ deficit as of June 30, 2021 and December 31, 2020 were $979,148 and $881,685 respectively.  It was mainly caused by the rise in the accumulated deficits.

Cash Flows from Operating Activities

For the period ended June 30, 2021, the net cash used in operating activities was $978,309, compared to the same period ended 2020, the net cash used in operating activities was $690,607.  The change in cash in operating activities between these two periods was primarily due to the increase in the net loss.

Cash Flows from Investing Activities

For the six months ended June 30, 2021 there was $12,966 used in investing activities compared to $0 for the same period ended June 30, 2020.

Cash Flows from Financing Activities

For the same period ended June 30, 2021 and 2020, the net cash generated from financing activities were $647,959 and $345,776 respectively.  The change between these two periods was mostly caused by the increase of the cash proceeds from issuance of stock and the repayment of related party advances.

 

 

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 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.


20



PURCHASE OF SIGNIFICANT EQUIPMENT

 

We do not intend to purchase any significant equipment during the next twelve months.

 

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.

 

GOING CONCERN

 

The financial statements contain an explanatory paragraph expressing substantial doubt about our ability to continue operating as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which states that we will realize our assets and satisfy any liabilities and commitments in the ordinary course of business.

 

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 June 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. Under the new ownership and management, accounting officer will provide monthly, quarterly, semi-annually, annually financial statements to our shareholders, CPA, and corporate management to ensure accurate financial activities recorded.

 

 

 

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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None in the quarter ended June 30, 2021

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

No senior securities were issued and outstanding during the six-month period ended June 30, 2021.


21



 

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 12, 2021

 

VIVIC CORP.          

                                                                             

/s/ Shang-Chiai Kung

___________________                                                                                                        

By: Shang-Chiai Kung

 

Chief Executive Officer, Chief Financial Officer     

 

 


22