UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to FORM 10-KT
[ ] AMENDED ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from May 1, 2019 to December 31, 2019
COMMISSION FILE NO. 333-219148
VIVIC CORP.
(Exact name of registrant as specified in its charter)
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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 United States corporate virtual office)
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant as 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [X] 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 check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes [ ] No [X]
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Preferred stock, $0.001 par value; 5,000,000 shares authorized; 832,000 and 832,000 shares issued and outstanding as of December 31, 2019 and May 15, 2020, respectively.
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Common stock, $0.001 par value; 70,000,000 shares authorized; 32,363,200 shares and 32,363,200 shares issued and outstanding as of December 31, 2019 and May 15, 2020, respectively.
The aggregate number of shares of Common Stock held by non-affiliates of the Registrant on June 30, 2019 are 5,779,800 shares. |
EXPLANATORY NOTE
We are amending the Form 10-KT transitional report for the period from May 1, 2019 to December 31, 2019 to add more substantial disclosure of our business operations and the “risk factors”.
TABLE OF CONTENTS
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| PART I |
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ITEM 1 | DESCRIPTION OF BUSINESS |
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ITEM 1A | RISK FACTORS |
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ITEM 1B | UNRESOLVED STAFF COMMENTS |
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ITEM 2 | PROPERTIES |
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ITEM 3 | LEGAL PROCEEDINGS |
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ITEM 4 | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
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PART II |
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ITEM 5 | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS |
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ITEM 6 | SELECTED FINANCIAL DATA |
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ITEM 7 | MANAGEMENT'S DISCUSSION AND ANALYSIS OR RESULTS OF OPERATIONS |
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ITEM 7A | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
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ITEM 9 | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
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ITEM 9A | CONTROLS AND PROCEDURES |
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ITEM 9B | OTHER INFORMATION |
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| PART III |
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ITEM 10 |
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT |
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ITEM 11 | EXECUTIVE COMPENSATION |
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ITEM 12 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
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ITEM 13 | CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
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ITEM 14 | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
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PART IV |
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ITEM 15 | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
FORWARD-LOOKING STATEMENTS
This Amended Annual Report contains forward-looking statements. These statements relate to future events or our future financial performance. 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.
As used in this amended annual report, the terms "we", "us", "our", "the Company", mean VIVIC CORP., unless otherwise indicated.
All dollar amounts refer to US dollars unless otherwise indicated.
DESCRIPTION OF BUSINESS
We were incorporated on February 16, 2017 in the State of Nevada. However, that office is not intended to be staffed by any executives of the Company. Legal documents and notices are received there.
The company has several offices with employees located in Taiwan, China, and Hong Kong. The US office will be established soon.
We were initially a travel agency that organized individual and group tours in the Dominican Republic, such as cultural, recreational, sport, business, ecotours and other travel tours.
Effective on December 21, 2018, Yoel Rosario Duran resigned from all positions he held in the Company, including Chief Executive Officer, Chief Financial Officer, President, Treasurer, and Board Director, Dmitriy Perfilyev resigned as the Secretary of the Company. The following new members have been appointed to the board of directors and principal officers of the company:
(1)Wen-Chi Huang was appointed as the Chairman of the Board and Board Director;
(2)Huilan Chen was appointed as the Secretary of the Board, Board Director and Controller of the Company;
(3)Cheng-Hsing Hsu was appointed as the Board Director and Chief Financial Officer of the Company;
(4)Yun-Kuang Kung was appointed as the Chief Executive Officer of the Company;
(5)Kuen-Horng Tsai was appointed as the Supervisor of the Board of Directors and Board Director; and
(6)Kun-Teng Liao was appointed as the Board Director.
On December 27, 2018, Honetech Inc., a Samoa company, consummates the purchase of 2,499,800 shares of common stock of VIVIC Corp. from Yoel Rosario Duran for the price of $189,984.80, 1,999,800 shares of common stock of VIVIC Corp. from Dmitriy Perfilyev for the price of $151,984.80, and 817,200 free trading shares for the price of $11,440.80 pursuant to the share purchase agreements entered on December 21, 2018. Upon the consummation of those transactions, Honetech Inc. became the controlling shareholder of VIVIC Corp. Honetech Inc. used its company working capital to purchase these shares.
The controlling shareholder of Honetech Inc. is Ms. Yu Cheng, who is the mother-in-law of Yun-Kuang Kung, who is the Chief Executive Officer of VIVIC Corp. Ms. Cheng has given Mr. Kung a power of attorney and he has discretion regarding voting the shares of VIVIC Corp. that are owned by Honetech Inc.
We also started negotiating with Eco Gas Tech Co., Ltd (“Eco Gas”) to launch the research and development of energy-saving yacht engines. Eco Gas is considered a “related company” as our President also owns shares in Eco Gas.
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Eco Gas has represented to us because it owns the advance technology which can achieve energy efficiency of up to 50%. 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.
Eco Gas does not have any patents and has not applied for any patents regarding energy-saving engines. Even more than most efforts to enter into new businesses, investors should not rely on this particular effort to be successful.
In 2018, we conducted detailed market research in several countries in Asia. We decided to expand our marine tourism business in Taiwan, China, and Southeast Asia, where marine tourism was expanding. Of course, at the present time, tourism in general has been negatively impacted by COVID-19 in a substantial manner. All references in this Amended Annual Report to tourism are qualified by this significant risk factor.
On October 15, 2019, we acquired Guangzhou Monte Fino Yacht Co., Ltd., a Chinese limited liability company (“Guangzhou Monte Fino”). Guangzhou Monte Fino holds the exclusive license to use the brand “Monte Fino” in the mainland China.
Monte Fino is a famous yacht brand owned by Taiwan Kha Shing Yacht Company, one of the leading yacht manufacturers in the world. Guangzhou Monte Fino is in the process of applying for licenses to develop a yacht marina in Shanwei City, Guangdong Province, China. Guangzhou Monte Fino is also trying to obtain the necessary licenses to develop a marina in Fujian Province, China. It has also developed and operates “Joy Wave”(享浪)，an online yacht rental and leisure service business in Guangzhou, China.
Guangzhou Monte Fino has conducted business in several Chinese provinces, including Guangdong, Fujian and Hainan. It has received a few awards at the famous China Boat Show.
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.
In the field of yacht real estate, we are actively attempting to obtain all of the licenses necessary to construct and operate marinas. Two marina construction projects have reached the development-planning level with the local governments, with total berths of more than 600.
Most of our services and products can be customized according to the requirements of commercially reasonable customers.
ITEM 1A. RISK FACTORS
Because our auditors have raised a going concern, there is an uncertainty that we will be able to continue operations without generating additional revenues or obtaining more funds.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months if we do not generate more revenues or obtain more funds for our business operations. There is no assurance that we can generate more revenues or obtain more investments.
We may not be able to compete effectively against our competitors.
We face strong competition from well-established companies and small independent companies. We will be at a competitive disadvantage in obtaining the facilities, employees, financing and other resources required to provide our services and products to customers. Our opportunity to obtain customers may be limited by our financial resources and other assets. Our main competitors in marine tourism are Jetpon Yacht Club, Lucky Bay Yacht Club and Ocean Blue Hatch Company.
We also face keen competition in the prospective business that we intend to engage, including energy-saving engines manufacturing and sales, marina development and operation, and yacht manufacturing and sales. In the energy-saving engines business, our main competitors are ERIC Boating, HENSEN Yacht Company and Ikung Yacht Company. In the marina development and operation business, our main competitors are Seven Star Marina in Shenzhen, Shenzhen Bay Yacht Marina and Wuyuan Bay Yacht Marina. In the yacht manufacturing business, our main competitors are Jetpon Yacht Club, HAISEA Yacht Company and HENSEN Yacht Company.
Many of our main competitors are well-established companies with reputation in the respective industries. Therefore, there is no assurance that we will be able to effectively compete against these competitors.
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Declines or disruptions in the tourism industry generally could reduce our revenues.
We rely 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 our business, we may be subject to liability claims arising out of accidents or disasters causing injury to our customers, including claims for serious personal injury or death. There can be no assurance that we will be able to obtain sufficient insurance coverage at acceptable premium levels in the future. Successful assertion against us of one or a series of large uninsured claims, or of one or a series of claims exceeding our insurance, could adversely affect our business, financial condition and results of operations.
The lack of intellectual property protection might cause adverse impact to our business
Eco Gas, our related company in the energy-saving yacht engines industry, has not applied for or obtained any patent for its proprietary technologies. The lack of patent protection might cause us to lose our technology advantages if our competitors are able to reverse-engineer our technology and produce similar products.
In addition, we don’t own any trade mark. Although we have started the process of applying for trade marks in China, Taiwan and US, there is assurance that the trade mark registration can be obtained timely.
Our lack of revenues and limited operations cause us unable to afford to establish an audit committee.
Since we only had limited operations and did not have much revenue, we are unable to afford to establish an audit committee.
We don’t have any substantial asset in the United States and may not be able to own substantial assets in the United States in the near future.
As a Nevada corporation, we plan 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..
COVID-19 pandemic might cause significant impact to our business operations
Our business could be affected by the recent outbreak of the COVID-19 disease. With an aim to contain the COVID-19 outbreak, both China and Taiwan governments have imposed various strict measures including, but not limited to, travel restrictions, mandatory quarantine requirements, and postponed resumption of business operations. Considering the features of our business in the tourism and recreation industries, we have been experiencing business disruption as a result of those measures to contain the COVID-19 outbreak. Additionally, as COVID-19 continues to evolve into a worldwide health crisis, it has adversely affected the global economy and financial markets. If the COVID-19 outbreak is not effectively controlled in a short period of time, our business and results of operations could be adversely affected to the extent the COVID-19 outbreak harms the world economy generally. The extent to which the COVID-19 outbreak impacts our financial condition and results of operations for the full year of 2020 cannot be reasonably estimated at this time and will depend on future developments that currently cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 outbreak and the actions to contain the COVID-19 outbreak or treat its impact.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our subsidiary entity, Guangzhou Monte Fino, owns a tourist yacht in Guangzhou, China. It is a 13.6 meters-long yacht manufactured by Taiwan Kai Shing in 2016. Guangzhou Monte Fino also owns a white 2018 BYD hybrid car, which was used primarily for business purposes.
ITEM 3. LEGAL PROCEEDINGS
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We are not currently involved in any legal proceedings and we are not aware of any pending or potential legal actions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No report required.
PART II
ITEM 5. MARKET FOR EQUITY SECURITIES AND OTHER SHAREHOLDER MATTERS
MARKET INFORMATION
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 and 832,000 shares issued and outstanding as of April 30, 2018 and 2019, respectively. There were 832,000 shares and there are 832,000 shares issued and outstanding as of December 31, 2019 and as of March 17, 2020.
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Common stock, $0.001 par value; 70,000,000 shares authorized; 117,384,000 and 21,360,000 shares issued and outstanding as of April 30, 2018 and 2019, respectively. 32,363,200 and 32,363,200 shares issued and outstanding as of December 31, 2019 and March 17, 2020, respectively.
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Our common stock is quoted on the OTCQB market under the symbol VIVC.
DIVIDENDS
We have never paid or declared any dividends on our common stock and do not anticipate paying dividends in the foreseeable future.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We currently do not have any equity compensation plans.
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
FORWARD-LOOKING STATEMENTS
Statements made in this Annual Report that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may,""will,""expect,""believe,""anticipate,""estimate,""approximate" or "continue," or the negative thereof.
We intend that such forward-looking statements be subject to the safe harbors for such statements.
We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's commercially reasonable judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
RESULTS OF OPERATIONS
Our financial statements have been prepared assuming that we will continue as a going concern. To evaluate this assumption, the section below with the title of “GOING CONCERN” should be reviewed carefully. In addition, NOTE - 1 to the Audited Financial Statements should also be reviewed carefully. Based on the assumption stated above, we have not included adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary if we are not able to continue in operation.
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We generated net revenues of nil and $99,975 for the years ended April 30, 2018 and 2019 respectively. For the eight months ended December 31, 2019, the net revenues were $428,340. The significant rise in net revenues were mainly due to the increase in revenue deriving from consulting services rendered regarding consulting for marina construction and yacht brokerage.
For the year ended April 30, 2018, the net loss was $18,910, which comprised the profit of $7,035 for the discontinued operations. For the year ended April 30, 2019, the net profit was $26,113. For the eight months ended December 31, 2019, the net loss was $362,244. The main factor was the increase in the general and administrative expenses and the impairment loss on acquisition of a subsidiary.
Our general and administrative expenses for the years ended April 30, 2018 and 2019 were $25,945 and $66,921 respectively. For the eight months ended December 31, 2019, the general and administrative expenses of $448,792 were incurred. The main reason for the increase in the general and administrative expenses was that the Company expanded its operations. General and administrative expenses were basically the corporate overhead, such as legal, accounting and office expenses.
LIQUIDITY AND CAPITAL RESOURCES
As of April 30, 2018, our total assets were $18,910, which consisted of $4,904 for the discontinued operations. As of April 30, 2019, the total assets were $181,519. As of December 31, 2019, the total assets were $851,699. The rise was mainly caused by the increased cash and cash equivalent.
Our total liabilities were $10,078 and $118,133 as of April 30, 2018 and 2019 respectively. As of December 31,2019, our total liabilities were $1,023,560. The amounts due to the related parties generated most of the increase. The amount due to related parties is $617,180 which were the loan from Honetech Inc. and payable to Go Right Holdings Ltd. and Continental Development Corp.
The accumulated losses were $20,868 as of April 30, 2018, compared to April 30, 2019, the accumulated profits were $5,245. As of December 31, 2019, the accumulated losses were $344,788.
As of April 30, 2018 and 2019, the total shareholders’ equity was $8,832 and $63,386 respectively. As of December 31, 2019, the shareholders’ deficit was $287,966.
Cash Flows from Operating Activities
For the year ended April 30, 2018, the net cash used in operating activities was $17,464, which included the cash generated from the discontinued operations of $1,446. For the year ended April 30, 2019, the net cash generated from operating activities was $34,535. For the eight months ended December 31, 2019, the net cash generated from operating activities was $292,974. It was primarily caused by an increase in revenue.
Cash Flows from Investing Activities
For the years ended April 30, 2018 and 2019, the cash used in investing activities were $6,150 which wholly related to the discontinued operations and nil respectively. For the eight months ended December 31, 2019, the cash used in investing activities was $97,032. The increase was mainly due to the rise in the purchase of fixed assets and acquisition of a subsidiary.
Cash Flows from Financing Activities
For the year ended April 30, 2018, the net cash generated from financing activities was $33,050. For the year ended April 30, 2019, the net cash generated from financing activities was $121,978. For the eight months ended December 31, 2019, the net cash generated from financing activities was $185,252. It was primarily caused by a loan from Honetech Inc. or from its primary owner, Ms. Yu Cheng.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a combination of our existing funds, revenue from operations and one or more additional loans from Honetech Inc. or its primary owner, Ms. Yu Cheng. 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.
Based on our business plan, the management anticipates that there will be increases in operating expenses and capital expenditures in: (i) developmental expenses associated with the business; and (ii) marketing expenses. We intend to finance these expenses
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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. 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 opportunities.
Lack of additional investments would significantly and materially restrict our business operations. In addition, it could prevent VIVIC Corp. from being a going concern. It is important to review the sections below and discusses/considers this topic in more detail.
MATERIAL COMMITMENTS
As of the date of this Amended Annual Report, we do not have any material commitments.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Amended Annual 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 independent auditors' report, in the summary portion, expresses substantial doubt about our ability to continue as a going concern. In addition, NOTE – 1, which accompanies our financial statements, expresses substantial doubt about our ability to continue as a going concern. In addition, the independent auditor’s opinion and report are based on, at least in significant part, on the Company’s Amended Annual Report.
The financial statements have been prepared "assuming that we will continue as a going concern." That assumes we will be able to raise additional money from investors, effectively use our assets and satisfy our liabilities and commitments in the ordinary course of business. There is no assurance that we can do so.
For the period ended December 31, 2019, we have not established a recurring source of revenue to sufficiently cover our 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 financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary if we are not able to continue as a going concern.
Management believes that the current actions to obtain additional funding and implement our strategic plans provide the opportunity 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
VIVIC Corp. has several significant risk factors that are discussed above in Part I, Item 1A, entitled “Risk Factors”. In addition, as stated in several places in this Amended Annual Report, VIVIC Corp. is a very small company. Its revenue may be smaller than most or perhaps all of its competitors.
VIVIC Corp. may also have fewer employees than most of its competitors. Several of the executives at VIVIC Corp. started in 2018 and therefore have very little experience with VIVIC Corp.
The businesses in which VIVIC Corp. is currently engaged and the businesses in which VIVIC Corp. intends to engage require a variety of licenses from governmental agencies. There is no assurance that VIVIC Corp. can obtain or maintain those licenses.
VIVIC Corp. intends to develop energy-saving engines and, in addition, energy-saving yachts. These yachts will be more expensive than traditional yachts of the same size and comparable equipment. There is no evidence that a market will exist for this product, although automobiles with similar goals are being produced in reasonably large quantities.
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The brand of “Monte Fino is well recognized in many countries. However, it is not well recognized in the mainland China.
As discussed in other places in this Amended Annual Report, COVID-19 has created many commercial problems. These problems are particularly severe in the tourism business in general and in the marine-related business. Until there is an effective vaccine or an effective cure, or perhaps both, we expect our current business and potential future business to be adversely impacted.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
VIVIC CORP.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
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Report of Independent Registered Public Accounting Firm – HKCM CPA & Co. |
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Report of Independent Registered Public Accounting Firm – Fruci & Associates II, PLLC |
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Consolidated Balance Sheets as of December 31, 2019, April 30, 2019 and April 30, 2018 |
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Consolidated Statements of Operations And Comprehensive (Loss) Income for the Period ended December 31, 2019 and the Years ended April 30, 2019 and 2018 |
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Consolidated Statements of Cash Flows for the Period ended December 31, 2019 and the Years ended April 30, 2019 and 2018 |
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Consolidated Statement of Changes in Shareholders’ Equity (Deficit) for the Period ended December 31, 2019 and the Years ended April 30, 2019 and 2018 |
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Notes to Consolidated Financial Statements |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of VIVIC CORP.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Vivic Corp. and Subsidiaries (the “Company”) as of December 31, 2019 and April 30, 2019, the related consolidated statements of operations and comprehensive (loss) income, cash flows and changes in shareholders’ (deficit) equity for the period from May 1, 2019 to December 31, 2019 and the year ended April 30, 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2019 and April 30, 2019, and the results of its operations and its cash flows for the period from May 1, 2019 to December 31, 2019 and the year ended April 30, 2019, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 3 to the consolidated financial statements, as of December 31, 2019, the Company has suffered from an accumulated deficit of $344,788 and working capital deficit of $427,643. These factors create an uncertainty as to the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ HKCM CPA Co.
Certified Public Accountants
We have served as the Company's auditor since 2019.
Hong Kong, China
April 2, 2020
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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VIVIC CORP.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2019, APRIL 30, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| December 31, |
| April 30, |
| April 30, | |||
| 2019 |
| 2019 |
| 2018 | |||
ASSETS |
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Current assets: |
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Cash and cash equivalents | $ | 562,503 |
| $ | 170,519 |
| $ | 14,006 |
Deposits and prepayments |
| - |
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| 11,000 |
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| - |
Other receivables |
| 23,656 |
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| - |
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| - |
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Total current assets |
| 586,159 |
|
| 181,519 |
|
| 14,006 |
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
| 265,540 |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Assets of discontinued operations |
| - |
|
| - |
|
| 4,904 |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS | $ | 851,699 |
| $ | 181,519 |
| $ | 18,910 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY |
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
|
|
|
|
Trade payable | $ | 12,448 |
| $ | - |
| $ | - |
| 306,248 |
|
| 11,255 |
|
| - | |
Deferred revenue |
| 36,841 |
|
| - |
|
| - |
Amounts due to related parties |
| 617,180 |
|
| 99,937 |
|
| 10,078 |
Current portion of lease liability |
| 5,022 |
|
| - |
|
| - |
Income tax payable |
| 36,063 |
|
| 6,941 |
|
| - |
|
|
|
|
|
|
|
|
|
Total current liabilities |
| 1,013,802 |
|
| 118,133 |
|
| 10,078 |
|
|
|
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Lease liability |
| 9,758 |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
| 1,023,560 |
|
| 118,133 |
|
| 10,078 |
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Shareholders’ (deficit) equity: |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 832,000, 832,000 and 0 shares issued and outstanding as of December 31, 2019, April 30, 2019 and April 30, 2018, respectively |
| 832 |
|
| 832 |
|
| - |
Common stock, $0.001 par value; 70,000,000 shares authorized; 32,363,200, 117,384,000 and 21,360,000 shares issued and outstanding as of December 31, 2019, April 30, 2019 and April 30, 2018, respectively |
| 32,363 |
|
| 117,384 |
|
| 21,360 |
Additional paid-in capital |
| 24,946 |
|
| (60,075) |
|
| 8,340 |
Accumulated other comprehensive loss |
| (1,319) |
|
| - |
|
| - |
(Accumulated losses) retained earning |
| (344,788) |
|
| 5,245 |
|
| (20,868) |
|
|
|
|
|
|
|
|
|
Total Vivic Corp. shareholders’ (deficit) equity |
| (287,966) |
|
| 63,386 |
|
| 8,832 |
Non-controlling interest |
| 116,105 |
|
| - |
|
| - |
|
| (171,861) |
|
| 63,386 |
|
| 8,832 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY | $ | 851,699 |
| $ | 181,519 |
| $ | 18,910 |
# Post a Four for One (4:1) forward split effective on January 20, 2020.
See accompanying notes to consolidated financial statements.
12
VIVIC CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
FOR THE PERIOD ENDED DECEMBER 31, 2019 AND
THE YEARS ENDED APRIL 30, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| 8 Months ended December 31, |
|
Years ended April 30, |
| |||||
| 2019 |
| 2019 |
| 2018 |
| |||
|
|
|
|
|
|
|
|
|
|
Revenues, net | $ | 428,340 |
| $ | 99,975 |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
| (13,899) |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
| 414,441 |
|
| 99,975 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
General and administrative |
| (448,792) |
|
| (66,921) |
|
| (25,945) |
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
| (448,792) |
|
| (66,921) |
|
| (25,945) |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operation |
| (34,351) |
|
| 33,054 |
|
| (25,945) |
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Impairment loss |
| (299,242) |
|
| - |
|
| - |
|
Interest expense |
| (425) |
|
| - |
|
| - |
|
Interest income |
| 67 |
|
| - |
|
| - |
|
Other income |
| 504 |
|
| - |
|
| - |
|
Exchange difference |
| 325 |
|
| - |
|
| - |
|
Total other income (expense) |
|
(298,771) |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations before income taxes |
|
(333,122) |
|
|
33,054 |
|
|
(25,945) |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
| (29,122) |
|
| (6,941) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income from continuing operations |
| (362,244) |
|
| 26,113 |
|
| (25,945) |
|
|
|
|
|
|
|
|
|
|
|
Net income from discontinued operations |
| - |
|
| - |
|
| 7,035 |
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
| (362,244) |
|
| 26,113 |
|
| (18,910) |
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to non-controlling interest |
| (12,211) |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Vivic Corp. |
| (350,033) |
|
| 26,113 |
|
| (18,910) |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
| (1,319) |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS) INCOME |
| (351,352) |
|
| 26,113 |
|
| (18,910) |
|
|
|
|
|
|
|
|
|
|
|
Net loss per share – Basic and Diluted | $ | (0.01) |
| $ | 0.00 |
|
| (0.00) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
– Basic and Diluted |
| 65,548,624 |
|
| 29,515,464 |
|
| 19,252,000 |
|
|
|
|
|
|
|
|
|
|
|
# Post a Four for One (4:1) forward split effective on January 20, 2020.
See accompanying notes to consolidated financial statements.
13
VIVIC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED DECEMBER 31, 2019 AND
THE YEARS ENDED APRIL 30, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”))
| 8 Months ended December 31, |
| Years ended April 30, | ||||||
| 2019 |
| 2019 |
| 2018 | ||||
|
|
|
|
|
| ||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
| |
Net income (loss) | $ | (362,244) |
| $ | 26,113 |
| $ | (18,910) | |
Adjustments to reconcile net (loss) income to net cash generated from (used in) operating activities |
|
|
|
|
|
|
|
| |
Depreciation of property, plant and equipment |
| 9,672 |
|
| 1,026 |
|
| - | |
Impairment loss on good will |
| 299,242 |
|
| - |
|
| - | |
|
|
|
|
|
|
|
|
| |
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
| |
Deposits and prepayments |
| 45,207 |
|
| (10,800) |
|
| - | |
Other receivables |
| 6,234 |
|
| - |
|
| - | |
Trade payable |
| 296 |
|
| - |
|
| - | |
Accrued liabilities and other payable |
| 228,604 |
|
| 11,255 |
|
| - | |
Deferred revenue |
| 36,841 |
|
| - |
|
| - | |
Income tax payable |
| 29,122 |
|
| 6,941 |
|
| - | |
Cash generated from (used in) operating activities – continuing operation |
| 292,974 |
|
| 34,535 |
|
| (18,910) | |
Cash generated from operating activities – discontinued operation |
| - |
|
| - |
|
| 1,446 | |
Net cash generated from (used in) operating activities |
| 292,974 |
|
| 34,535 |
|
| (17,464) | |
|
|
|
|
|
|
|
|
| |
Cash flows from investing activities: |
|
|
|
|
|
|
|
| |
Purchase of property, plant and equipment |
| (18,164) |
|
| - |
|
| - | |
Acquisition of a subsidiary |
| (78,868) |
|
| - |
|
| - | |
Cash used in investing activities – continuing operation |
| (97,032) |
|
| - |
|
| - | |
Cash used in investing activities – discontinued operation |
| - |
|
| - |
|
| (6,150) | |
Net cash used in investing activities |
| (97,032) |
|
| - |
|
| (6,150) | |
|
|
|
|
|
|
|
|
| |
Cash flows from financing activities: |
|
|
|
|
|
|
|
| |
Advances from related parties |
| 58,159 |
|
| 99,937 |
|
| - | |
Proceeds of loan from former shareholder |
| - |
|
| 2,025 |
|
| 7,850 | |
Repayment on loan from former shareholder |
| - |
|
| (4,822) |
|
| - | |
Repayment of lease liability |
| (1,223) |
|
| - |
|
| - | |
Proceeds from issuance of common and preferred stock |
| - |
|
| 24,838 |
|
| 25,200 | |
Change in non-controlling interest |
| 128,316 |
|
| - |
|
| - | |
Net cash generated from financing activities |
| 185,252 |
|
| 121,978 |
|
| 33,050 | |
|
|
|
|
|
|
|
|
| |
Effect on exchange rate change on cash and cash equivalents |
| 10,790 |
|
| - |
|
| - | |
|
|
|
|
|
|
|
|
| |
NET CHANGE IN CASH AND CASH EQUIVALENTS |
| 391,984 |
|
| 156,513 |
|
| 9,436 | |
|
|
|
|
|
|
|
|
| |
BEGINNING OF PERIOD/YEAR |
| 170,519 |
|
| 14,006 |
|
| 4,570 | |
|
|
|
|
|
|
|
|
| |
END OF PERIOD/YEAR |
| 562,503 |
| $ | 170,519 |
| $ | 14,006 | |
|
|
|
|
|
|
|
|
| |
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
| |
Cash paid for income taxes | $ | - |
| $ | - |
| $ | - | |
Cash paid for interest | $ | 425 |
| $ | - |
| $ | - | |
|
|
|
|
|
|
|
|
| |
NON-CASH FINANCING TRANSACTIONS |
|
|
|
|
|
|
|
| |
Exchange of property, plant and equipment for settlement of debt | $ | - |
| $ | 3,678 |
| $ | - | |
Gain on settlement of debt | $ | - |
| $ | 3,603 |
| $ | - | |
|
|
|
|
|
|
|
|
| |
See accompanying notes to consolidated financial statements.
14
VIVC CORP.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ (DEFICIT) EQUITY
FOR THE PERIOD ENDED DECEMBER 31, 2019 AND THE YEARS ENDED APRIL 30, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
|
| Equity attributable to VIVIC Corp. shareholders |
|
|
|
|
| |||||||||||||||||||
|
| Preferred stock |
|
Common stock |
| Additional paid-in capital |
| Accumulated other comprehensive loss |
|
| Accumulated losses (retained earning) |
| Noncontrolling interests |
|
| Total shareholders’ (deficit) equity | ||||||||||
| No. of shares |
| Amount |
| No. of shares |
| Amount | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Balance as of May 1, 2017 |
| - |
| $ | - |
| 18,000,000 |
| $ | 18,000 |
| $ | (13,500) |
| $ | - |
| $ | (1,958) |
| $ | - |
| $ | 2,542 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Share issued for capital proceeds of $25,200 |
| - |
|
| - |
|
3,360,000 |
|
| 3,360 |
|
| 21,840 |
|
| - |
|
| - |
|
| - |
|
| 25,200 | |
Net loss for the year |
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
| (18,910) |
|
| - |
|
| (18,910) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Balance as of April 30, 2018 |
| - |
| $ | - |
| 21,360,000 |
| $ | 21,360 |
| $ | 8,340 |
| $ | - |
| $ | (20,868) |
| $ | - |
| $ | 8,832 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Balance as of May 1, 2018 |
| - |
| $ | - |
| 21,360,000 |
|
| 21,360 |
| $ | 8,340 |
| $ | - |
| $ | (20,868) |
| $ | - |
| $ | 8,832 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Share issued for capital proceeds of $24,838 |
| 832,000 |
|
| 832 |
|
96,024,000 |
|
| 96,024 |
|
| (72,018) |
|
| - |
|
| - |
|
| - |
|
| 24,838 | |
Gain on settlement of debt |
| - |
|
| - |
| - |
|
| - |
|
| 3,603 |
|
| - |
|
| - |
|
| - |
|
| 3,603 | |
Net income for the year |
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
| 26,113 |
|
| - |
|
| 26,113 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Balance as of April 30, 2019 |
| 832,000 |
| $ | 832 |
| 117,384,000 |
| $ | 117,384 |
| $ | (60,075) |
| $ | - |
| $ | 5,245 |
| $ | - |
| $ | 63,386 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Balance as of May 1, 2019 |
| 832,000 |
| $ | 832 |
| 117,384,000 |
| $ | 117,384 |
| $ | (60,075) |
| $ | - |
| $ | 5,245 |
| $ | - |
| $ | 63,386 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Shares cancelled |
| - |
|
| - |
| (85,020,800) |
|
| (85,021) |
|
| 85,021 |
|
| - |
|
| - |
|
| - |
|
| - | |
Change in non-controlling interest |
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 128,316 |
|
| 128,316 | |
Foreign currency translation adjustment |
| - |
|
| - |
|
- |
|
| - |
|
| - |
|
| (1,319) |
|
| - |
|
| - |
|
| (1,319) | |
Net loss for the period |
| - |
|
| - |
| - |
|
| - |
|
| - |
|
| - |
|
| (350,033) |
|
| (12,211) |
|
| (362,244) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Balance as of December 31, 2019 |
| 832,000 |
| $ | 832 |
|
32,363,200 |
| $ | 32,363 |
| $ | 24,946 |
| $ | (1,319) |
| $ | (344,788) |
| $ | 116,105 |
| $ | (171,861) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
# Post a Four for One (4:1) forward split effective on January 20, 2020.
See accompanying notes to consolidated financial statements.
15
VIVIC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 2019
FOR THE YEARS ENDED APRIL 30, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE－1ORGANIZATION AND BUSINESS BACKGROUND
VIVIC Corp. (the "Company" or “VIVIC”) is a corporation established under the corporation laws in the State of Nevada on February 16, 2017. The business background of the Company is described in the section of this Amended Annual Report entitled “DESCRIPTION OF BUSINESS”. The reader should review that entire section.
Set forth below is information on organizational developments regarding the Company. Other organizational-related matters are described in the section of this Amended Annual Report entitled “Description of Business”. Those matters include a significant change in the ownership of equity in the Company and a significant change in the officers and directors of the Company. During the 8 months ending December 31, 2019, the Company, through its subsidiaries, mainly engaged in providing consultancy services in Hong Kong, Macau and The People’s Republic of China for marina construction and yacht brokerage.
On August 2, 2019, the Company formed a wholly owned subsidiary named Vivic Corporation (Guangzhou) Co., Limited in the People’s Republic of China.
On September 19, 2019, the Company approved the change of fiscal year from April 30 to December 31.
On October 15, 2019, the Company completed the acquisition of 100% ownership of Guangzhou Monte Fino Yacht Company Limited in the People’s Republic of China.
On November 22, 2019, the Company formed a wholly owned subsidiary named Vivic Corporation (Fujian) Co., Limited in the People’s Republic of China.
On January 15, 2020, the Company approved an amendment to the Company’s Certificate of Incorporation (the “Charter”) to file with the Secretary of State of the State of Nevada a Certificate of Amendment to the Charter (the “Charter Amendment”). Pursuant to the Charter Amendment, the Company’s Charter was amended, effective as of January 20, 2020, to effectuate a Four for One (4:1) forward split of the Company’s shares of common stock. This amendment supersedes the amendment filed on November 2, 2019 regarding the same Four for One (4:1) forward split. The number of authorized shares and par value remain unchanged. All share and per share information in this financial statements and footnotes have been retroactively adjusted for the period and years presented, unless otherwise indicated, to give effect to the forward stock split.
16
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 (Guangzhou) Co., Limited |
| The People’s Republic of China |
| Tourism consultancy service |
| Registered: RMB10,000,000 Paid up: RMB0 |
| 75% |
|
|
|
|
|
|
|
|
|
Vivic Corporation (Fujian) Co., Limited |
| The People’s Republic of China |
| Tourism consultancy service |
| Registered: RMB10,000,000 Paid up: RMB0 |
| 75% |
|
|
|
|
|
|
|
|
|
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: RMB2,244,758 |
| 100% |
|
|
|
|
|
|
|
|
|
Guangzhou Hysoul Yacht Company Limited |
| The People’s Republic of China |
| Provision of yacht service |
| Registered: RMB10,000,000 Paid up: RMB140,000 |
| 100% |
|
|
|
|
|
|
|
|
|
Guangzhou Khashing Yacht Company Limited |
| The People’s Republic of China |
| Provision of yacht service |
| Registered: RMB10,000,000 Paid up: RMB73,000 |
| 90% |
VIVC and its subsidiaries are hereinafter referred to as (the “Company”).
NOTE－2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes.
·Basis of presentation
These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).
·Use of estimates
In preparing these 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 period and years reported. Actual results may differ from these estimates.
·Basis of consolidation
The consolidated financial statements include the financial statements of VIVC and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
·Cash and cash equivalents
17
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.
18
·Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on 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 |
|
|
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.
·Revenue recognition
The Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) using the full retrospective transition method. The Company's adoption of ASU 2014-09 did not have a material impact on the amount and timing of revenue recognized in its consolidated financial statements.
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. | ||||
·Comprehensive income
Accounting Standards Codification (“ASC”) 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 consolidated statement of shareholders’ 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.
·Income taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
19
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.
For the period ended December 31, 2019 and the years ended April 30, 2019 and 2018, the Company did not have any interest and penalties associated with tax positions. As of December 31, 2019, April 30, 2019 and 2018, the Company did not have any significant unrecognized uncertain tax positions.
·Foreign currencies translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated 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 December 31, 2019 and the years ended April 30, 2019 and 2018:
| December 31, |
| April 30, | ||
| 2019 |
| 2019 |
| 2018 |
Period-end RMB:US$ exchange rate | 6.9668 |
| 6.9668 |
| 6.8764 |
Period average RMB:US$ exchange rate | 6.9668 |
| 6.9668 |
| 6.6146 |
Period-end HK$:US$ exchange rate | 7.7872 |
| 7.7872 |
| 7.8312 |
Period average HK$:US$ exchange rate | 7.8346 |
| 7.8346 |
| 7.8370 |
·Leases
The Company adopted Topic 842, Leases (“ASC 842”), using the modified retrospective approach through a cumulative-effect adjustment and utilizing the effective date of January 1, 2019 as its date of initial application, with prior periods unchanged and presented in accordance with the previous guidance in Topic 840, Leases (“ASC 840”).
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.
20
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.
·Net income per share
The Company calculates net income 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 year. 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.
21
·Retirement plan costs
Contributions to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying consolidated statements of operation as the related employee service is provided.
·Segment reporting
ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. The Company operates in one reportable operating segment in Asian region.
·Related 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.
·Concentrations and credit risk
The Company’s principal financial instruments subject to potential concentration of credit risk are cash and cash equivalents, including amounts held in money market accounts. The Company places cash deposits with a federally insured financial institution. The Company maintains its cash at banks and financial institutions it considers to be of high credit quality; however, the Company’s domestic cash deposits may at times exceed the 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.
·Fair value of financial instruments
The carrying value of the Company’s financial instruments (excluding lease liability): cash and cash equivalents, accounts receivable, amounts due to related parties, 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 short-term bank borrowings and 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. |
22
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.
·Recent accounting pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
Accounting Standards Adopted
In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”) in order to increase transparency and comparability among organizations by recognizing right-of-use assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous generally accepted accounting principles. ASU 2016-02 requires a lessee to recognize a lease liability for future lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term on the balance sheet for most lease arrangements. The new standard also changes many key definitions, including the definition of a lease. The new standard includes a short-term lease exception for leases with a term of 12 months or less, as part of which a lessee can make an accounting policy election not to recognize right-of-use assets and lease liabilities. Lessees will continue to differentiate between finance leases (previously referred to as capital leases) and operating leases using classification criteria that are substantially similar to the previous guidance in ASC 840.
ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) and early adoption is permitted. In August 2018, the FASB issued ASU 2018-11, Leases, Targeted Improvements, which provides a new transition option in which an entity initially applies ASU 2016-02 at the adoption date and recognizes a cumulative-effect adjustment in the period of adoption. Prior period comparative balances will not be adjusted. The Company used the new transition option and was also utilizing the package of practical expedients that allows it to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases. We also used the short-term lease exception for leases with a term of 12 months or less. Additionally, the Company used the practical expedient that allowed each separate lease component of a contract and the associated non-lease components to be treated as a single lease component. The exercise of lease renewal options is at our discretion and the renewal to extend the lease terms are not included in the Company’s Right-Of-Use assets and lease liabilities as they are not reasonably certain of exercise. The Company will evaluate the renewal options and when they are reasonably certain of exercise, the Company will include the renewal period in its lease term. As of the January 1, 2019, effective date the Company identified one finance lease arrangement in which it is a lessee.
In calculating the present value of the lease payments, the Company applied an individual discount rate for each of its leases, and determined the appropriate discount rate based on the remaining lease terms at the date of adoption. As the lessee to several lease agreements, the Company did not have insight into the relevant information that would be required to arrive at the rate implicit in the lease. Therefore, the Company utilized its outstanding borrowings as a benchmark to determine the incremental borrowing rate for its leases. The benchmark rate was adjusted to arrive at an appropriate discount rate for each lease.
In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), which expands the scope of Compensation – Stock Compensation (“Topic 718”) to include share-based payment transactions for acquiring goods and services from nonemployees. This amendment applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The Company adopted ASU 2018-07 on January 1, 2019. The impact was immaterial to the financial statements.
In June 2018, the FASB issued ASU No. 2018-08, Not-For-Profit Entities – Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made (“ASU 2018-08”). ASU 2018-08 clarifies how an
23
entity determines whether a resource provider is participating in an exchange transaction by evaluating whether the resource provider is receiving commensurate value in return for the resources transferred. The guidance is effective for annual periods beginning after June 15, 2018, including interim periods within those annual periods, and has been adopted on a modified prospective basis. The modified prospective adoption is applied to agreements that are not completed as of the effective date, or entered into after the effective date. Under the modified prospective adoption approach, prior period results have not been restated and no cumulative-effect adjustment has been recorded. The Company does not expect this standard to have a material impact on its financial statements.
Accounting Standards Issued, Not Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU requires measurement and recognition of expected credit losses for financial assets. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. ASU 2016-13 is effective for the Company beginning January 1, 2023. Entities will apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is currently evaluating the potential effect of this standard on its financial statements. The Company does not expect this standard to have a material impact on its financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (“ASU 2018-13”), which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The amendment is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact this will have on the financial statements.
In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (“ASU 2018-18”), which clarifies the interaction between ASC 808, Collaborative Arrangements and ASC 606, Revenue from Contracts with Customers. Certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer. In addition, ASU 2018-18 precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue if the counterparty is not a customer for that transaction. ASU 2018-18 should be applied retrospectively to the date of initial application of ASC 606. This guidance is effective for interim and fiscal periods beginning after December 15, 2019. The Company is currently assessing the impact this will have on the financial statements.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020, with early adoption permitted. Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively. The Company does not expect the adoption of this standard to have a material impact on our financial position, results of operations or cash flows.
NOTE－3GOING CONCERN UNCERTAINTIES
The accompanying 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 $362,244 during the eight months ended December 31, 2019. Also, at December 31, 2019, the Company has incurred an accumulated deficit of $344,788 and working capital deficit of $427,643.
The continuation of the Company as a going concern through December 31, 2019 is dependent upon the continued financial support from its shareholders. Management believes the Company is currently pursuing additional financing
24
for its operations. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These 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－4BUSINESS COMBINATION
On October 15, 2019, the Company completed the Acquisition of Guangzhou Monte Fino Yacht Company Limited and Subsidiaries (collectively “MF Group”) (the “Acquisition”) for its 100% equity interest. The total consideration of the acquisition is approximately $85,000 in cash.
The purchase price allocation resulted in $299,242 of goodwill, as below:
Acquired assets: |
| US$ |
| |
Cash and cash equivalents |
| $ | 6,132 |
|
Deposits and prepayments |
|
| 34,207 |
|
Other receivables |
|
| 29,890 |
|
Plant and equipment |
|
| 268,777 |
|
|
|
| 339,006 |
|
|
|
|
|
|
Less: Assumed liabilities |
|
|
|
|
Accounts payable |
|
| (12,152) |
|
Accrued liabilities and other payables |
|
| (66,389) |
|
Amount due to a director |
|
| (459,084) |
|
Lease liability |
|
| (15,623) |
|
|
|
| (553,248) |
|
|
|
|
|
|
Fair value of net assets acquired |
|
| (214,242) |
|
Goodwill recorded |
|
| 299,242 |
|
|
|
|
|
|
Cash consideration allocated |
| $ | 85,000 |
|
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 December 31, 2019.
This Acquisition is considered as related party transaction, which the director of the Company controlled both companies.
NOTE－5PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
| December 31, |
| April 30, | |||||
| 2019 |
| 2019 |
| 2018 | |||
25
At cost: |
|
|
|
|
|
|
|
|
Service yacht | $ | 354,568 |
| $ | - |
| $ | - |
Motor vehicle |
| 18,164 |
|
| - |
|
| - |
Buggy and computer equipment |
| - |
|
| - |
|
| 6,150 |
Less: accumulated depreciation |
| (107,192) |
|
| - |
|
| (1,446) |
| $ | 265,540 |
|
$ | - |
|
$ | 4,704 |
Depreciation expense for the period ended December 31, 2019 and the years ended April 30, 2019 and 2018 were $9,672, $1,026 and $1,446, respectively.
NOTE－6AMOUNTS DUE TO RELATED PARTIES
The amounts represented temporary advances to the Company by the shareholders and director of the Company, which were unsecured, interest-free and had no fixed terms of repayments. Imputed interest from related parties’ loan is not significant.
NOTE－7LEASE 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:
| December 31, |
| April 30, | |||||
| 2019 |
| 2019 |
| 2018 | |||
|
|
|
|
|
|
|
|
|
Right of use assets | $ | 17,256 |
| $ | - |
| $ | - |
|
|
|
|
|
|
|
|
|
26
The lease liability – right of use is as follows:
| December 31, |
| April 30, | |||||
| 2019 |
| 2019 |
| 2018 | |||
|
|
|
|
|
|
|
|
|
Current portion | $ | 5,022 |
| $ | - |
| $ | - |
Non-current portion |
| 9,758 |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
Total | $ | 14,780 |
| $ | - |
| $ | - |
As of December 31, 2019, 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 December 31: |
|
|
|
|
|
|
2020 |
|
|
|
| $ | 6,589 |
2021 |
|
|
|
|
| 6,589 |
2022 |
|
|
|
|
| 5,785 |
|
|
|
|
|
|
|
Total: |
|
|
|
| $ | 18,963 |
NOTE－8INCOME TAXES
The Company has operations in various countries and is subject to tax in the jurisdictions in which it operates, 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 period and years presented.
The reconciliation of income tax rate to the effective income tax rate based on income before income taxes for the period ended December 31, 2019 and the years ended April 30, 2019 and 2018 are as follows:
| 8 months ended |
|
| |||||
| December 31, |
| Years ended April 30, | |||||
| 2019 |
| 2019 |
| 2018 | |||
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes | $ | (160,566) |
| $ | 33,054 |
| $ | (18,910) |
Statutory income tax rate |
| 21% |
|
| 21% |
|
| 21% |
Income tax expense at statutory rate |
| (33,719) |
|
| 6,941 |
|
| (3,971) |
Tax effect of non-deductible items |
| 62,841 |
|
| - |
|
| (411) |
Tax effect of allowance |
| - |
|
| - |
|
| 4,382 |
Income tax expense | $ | 29,122 |
| $ | 6,941 |
| $ |
- |
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.
27
The reconciliation of income tax rate to the effective income tax rate based on loss before income taxes for the period ended December 31, 2019 and the year ended April 30, 2019 are as follows:
|
| 8 months ended |
| Year ended |
| ||
|
| December 31, |
| April 30, |
| ||
|
| 2019 |
| 2019 |
| ||
|
|
|
|
|
|
|
|
Loss before income taxes |
| $ | (36,825) |
| $ | - |
|
Statutory income tax rate |
|
| 20% |
|
| 20% |
|
Income tax expense at statutory rate |
|
| (7,365) |
|
| - |
|
Tax effect of non-deductible items |
|
| - |
|
| - |
|
Net operating loss |
|
| 7,365 |
|
| - |
|
Income tax expense |
| $ | - |
| $ | - |
|
Hong Kong
The Company’s subsidiary operating in Hong Kong is subject to the Hong Kong Profits Tax at the income tax rates ranging from 8.25% to 16.5% on the assessable income arising in Hong Kong during its tax year.
The reconciliation of income tax rate to the effective income tax rate based on loss before income taxes for the period ended December 31, 2019 and the year ended April 30, 2019 are as follows:
|
| 8 months ended |
| Year ended |
| ||
|
| December 31, |
| April 30, |
| ||
|
| 2019 |
| 2019 |
| ||
|
|
|
|
|
|
|
|
Loss before income taxes |
| $ | (39,123) |
| $ | - |
|
Statutory income tax rate |
|
| 16.5% |
|
| 16.5% |
|
Income tax expense at statutory rate |
|
| (6,455) |
|
| - |
|
Tax effect of non-taxable income |
|
| (53) |
|
|
|
|
Tax effect of non-deductible items |
|
| 189 |
|
| - |
|
Net operating loss |
|
| 6,319 |
|
| - |
|
Income tax expense |
| $ | - |
| $ | - |
|
The People’s Republic of China
The Company’s subsidiary operating in The People’s Republic of China (“PRC) is subject to the PRC Profits Tax at the income tax rates 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 income before income taxes for the period ended December 31, 2019 and the year ended April 30, 2019 are as follows:
|
| 8 months ended |
| Year ended |
| ||
|
| December 31, |
| April 30, |
| ||
|
| 2019 |
| 2019 |
| ||
|
|
|
|
|
|
|
|
Loss before income taxes |
| $ | (96,608) |
| $ | - |
|
Statutory income tax rate |
|
| 25% |
|
| 25% |
|
Income tax expense at statutory rate |
|
| (24,152) |
|
| - |
|
Net operating loss |
|
| 24,152 |
|
| - |
|
Income tax expense |
| $ | - |
| $ | - |
|
28
The following table sets forth the significant components of the deferred tax assets and liabilities of the Company as of December 31, 2019 and April 30, 2019:
|
| December 31, |
| April 30, |
| ||
|
| 2019 |
| 2019 |
| ||
|
|
|
|
|
|
|
|
Deferred tax assets on |
|
|
|
|
|
|
|
Net operating loss carryforwards: |
|
|
|
|
|
|
|
-Taiwan |
| $ | 7,365 |
| $ | - |
|
-Hong Kong |
|
| 6,319 |
|
| - |
|
-PRC |
|
| 24,152 |
|
| - |
|
Less: valuation allowance |
|
| (37,836) |
|
| - |
|
Deferred tax assets, net |
| $ | - |
| $ | - |
|
As of December 31, 2019, the operations in incurred $37,836 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 $37,836 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－9SHAREHOLDERS’ (DEFICIT) EQUITY
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
For the year ended April 30, 2019, the Company issued 832,000 shares of its preferred stock at $0.001 for total proceeds of $832.
As of December 31, 2019, April 30, 2019 and 2018, the Company had a total of 832,000, 832,000 and 0 shares of its preferred stock issued and outstanding, respectively.
Common Shares
For the year ended April 30, 2018, the Company issued 3,360,000 (post-forward split) shares of its common stock at $0.03 per share for total proceeds of $25,200.
For the year ended April 30, 2019, the Company issued 96,024,000 (post-forward split) shares of its common stock at $0.001 per share for total proceeds of $24,006.
For the period ended December 31, 2019, the Company cancelled 85,020,800 (post-forward split) shares of its common stock.
On November 2, 2019, the Company approved an amendment to its Certificate of Incorporation (the “Charter”) to file with the Secretary of State of the State of Nevada a Certificate of Amendment to the Charter (the “Charter Amendment”). Pursuant to the Charter Amendment, the Company’s Charter was amended, effective as of November 19, 2019, to effectuate a Four for One (4:1) forward split of the Company’s shares of common stock.
29
On January 15, 2020, the Company approved an amendment to the Company’s Certificate of Incorporation (the “Charter”) to file with the Secretary of State of the State of Nevada a Certificate of Amendment to the Charter (the “Charter Amendment”). Pursuant to the Charter Amendment, the Company’s Charter was amended, effective as of January 20, 2020, to effectuate a Four for One (4:1) forward split of the Company’s shares of common stock. This amendment supersedes the amendment filed on November 2, 2019 regarding the same Four for One (4:1) forward split.
The number of authorized shares and par value remain unchanged. All share and per share information in this consolidated financial statements and footnotes have been retroactively adjusted for the period and years presented, unless otherwise indicated, to give effect to the forward stock split.
As of December 31, 2019, April 30, 2019 and 2018, the Company had a total of 32,363,200, 117,384,000 and 21,360,000 shares of its common stock issued and outstanding, respectively.
NOTE－10PENSION COSTS
The Company is required to make contribution to their employees under a government-mandated defined contribution pension scheme for its eligible full-times employees in PRC, Taiwan and Hong Kong. The Company is required to contribute a specified percentage of the participants’ relevant income based on their ages and wages level. During the period ended December 31, 2019 and the year ended April 30, 2019, $4,449 and $0 contributions were made accordingly.
NOTE－11RELATED 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.
As of April 30, 2018, the Company owed a total of $10,078 to Yoel Rosario Duran, a former officer and director of the Company. In December 2018, all the loans and due owned to the officers and shareholder have been paid off or forgiven by exchange of buggy and computer equipment.
In October 15, 2019, the Company paid $85,000 to Kung Yun-Kuang, its director to acquire subsidiary - Guangzhou Monte Fino Yacht Company Limited.
The Company paid $37,500 consulting fee to Honetech Inc., its controlling shareholder during the period ended December 31, 2019.
The Company paid $60,000 consulting fee to Continental Development Corporation, its related party during the period ended December 31, 2019.
Also, the Company received $424,000 consultancy service income from one of its shareholders during the period ended December 31, 2019.
The Company is actively working together with Eco Gas Tech Co. Ltd. in an attempt to develop an energy-efficient engine to be used in yachts. Eco Gas is owned by the President of VIVIC Corp. Those two companies work closely together and are closely related.
Apart from the transactions and balances detailed elsewhere in these accompanying consolidated financial statements, the Company has no other significant or material related party transactions during the periods and years presented.
30
NOTE－12COMMITMENTS AND CONTINGENCIES
As of December 31, 2019, the Company has no material commitments and contingencies.
NOTE－13SUBSEQUENT 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 after December 31, 2019, up through April 2, 2020 the Company issued the audited financial statements.
On January 20, 2020, a Four for One (4:1) forward split took effect on the issued and outstanding shares of the Company’s common stock.
TEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On May 14, 2019 (the "Termination Date"), the Board of Directors of Vivic Corp (the "Registrant") terminated the engagement of Fruci & Associates II, PLLC as its independent registered public accounting firm.
The reports of Fruci & Associates II, PLLC on the Company’s financial statements for the years ended April 30, 2018 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. The reports did include an explanatory paragraph about the uncertainty of the Registrant's ability to continue as a going concern. During the Registrant's two most recent fiscal years and the subsequent interim periods through to the Termination Date, there were no disagreements (as defined in Item 304 of Regulation S-K) with Fruci & Associates II, PLLC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Fruci & Associates II, PLLC, would have caused it to make reference in connection with any opinion to the subject matter of the disagreement. Further, during the Registrant's most recent fiscal year and the subsequent interim periods through to the Termination Date, there were no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).
On May 22, 2019, Vivic Corp (“Company”) engaged HKCM CPA & Co. (“HKCM”) as its principal accountant to audit the Company's financial statements. During the years ended April 30, 2019 and 2018 and through May 22, 2019, neither the Company nor anyone on its behalf consulted HKCM regarding (i) the application of accounting principles to a specific completed or contemplated transaction, (ii) the type of audit opinion that might be rendered on the Company's financial statements, or (iii) any matter regarding the Company that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions to Item 304 of Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).
ITEM 9A. CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is 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 Commission’s rules and forms. Disclosure of internal controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial
31
officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of April 30, 2019 and as of December 31, 2019 Based on that evaluation, our management concluded that due to lack of segregation of duties and written control policies our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the year April 30, 2019 and the eight months ended December 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE COMPANY
Wen-Chi Huang: Chairman of the Board and Board Director, 46 years’ old, is a resident of Taiwan. He received his Bachelor degree and PhD of Physics from National Cheng-Kung University, Taiwan. He conducted Postdoctoral Research at Department of Materials, National Cheng-Kung University, Taiwan. He won the first place of United Nations Industrial Development Organization Blue Sky Award, the award of Top Ten Outstanding Young Persons in Taiwan, the distinguished scholar of the recruitment program of global experts in Zhejiang Province, China. He was the General Manager of Zhejiang Cangnan Instrument Group, New Energy Division. He was the consultant of Guangri Group a Chinese company listed on Shanghai A stock market. He is the Honorary President of the Macao Photovoltaic New Energy Society. He is the distinguished researcher at Zhejiang University, China, the entrepreneurial mentor at National Chung Hsing University, Taiwan, and the entrepreneurial mentor of Youth Entrepreneurship Service, Fujian Province, China. He is the Chief Executive Officer of Taiwanese Business Association.
Kuen-Horng Tsai: Supervisor of the Board of Directors and Board Director, 53 years’ old, is a resident of Taiwan. He received Master of Biomedical Engineering from National Cheng Kung University, Taiwan, in 1991 and received PhD in Biomedical Engineering from National Cheng Kung University, Taiwan, in 1997. From January 2002 to July 2005, he was an Associate Professor at Department of Management and Information Technology of Southern Taiwan University of Science and Technology. From August 2005 to January 2008, he was the Associate Professor at the Institute of Mechatronic System Engineering, National University of Tainan, Taiwan. From August 2005 to July 2015, he was the Director of Innovation Incubation Center of National University of Tainan, Taiwan. He was a project reviewer of Taiwan’s National Science Council from August 1998 to present. From January 2008 to present, he is the Professor at the Institute of Mechatronic System Engineering, National University of Tainan, Taiwan.
Yun-Kuang Kung: Chief Executive Officer, 52 years’ old, is a resident of Taiwan. He received his MBA degree from Cleveland State University. From May 1996 to September 2016, he was the Mainland Marketing Director for Kha Shing Enterprise Co., Ltd (Taiwan). From September 2016 to present, he was the chairman of Guangzhou Montefino Yachts Co., Ltd. (China).
Cheng-Hsing Hsu: Board Director and Chief Financial Officer, 52 years’ old, is a resident of Taiwan. He received a Bachelor of Accounting from Fengjia University, Taiwan and EMBA from Chengjung University, Taiwan. From May 1993 to February 2000, he was the Manager of Accounting Department of Great Wall Enterprise Co., Ltd, Taiwan. From February 2000 to February 2001, he was the manager of Finance Department of Catcher Technology Company, Taiwan. From March 2001 to March, 2003, he was the Associate General Manager of Dachan Foods (Asia)Company, Hong Kong. From April 2003 to December 2018, he was the CFO of Nam Liong Group General Management Office. From June 2010 to December 2018, he was the Supervisor at Prolink Microsystems Corp., Taiwan. From May 2013 to December 2018, he was the Supervisor of TIONG LIONG Corporation.
Hwang Liu-Shiang Kung: Board Director, 76 years’ old, is a resident of Taiwan (R.O.C). She graduated from Tainan Community University. She is a chairman of Jiexin Investment Co., Ltd from June 2018 till present day. She is a director of Jianyu Material Industry Co., Ltd from September 2017 till present day, a director of Kha Shing Enterprises Co., Ltd. from June 2019 till present day, and a director of Horizon Yacht Co., Ltd. from June 2017 till present day.
Huilan Chen: Board Director, 51 years’ old, is a US resident. She received her Bachelor’s degree in Business Administration in International Trade from Feng-Chia University, Taichung, Taiwan and her MBA degree from Cleveland State University, Ohio, US. From October 1998 to May 2002, she was the product manager of
33
Tsann Kuen Enterprise Co. Ltd. Tainan, Taiwan. From October 2004 to October 2012, she was the Office Manager of Aclor Inc, Georgia, US. From December 2015 to August 2016, she was the Logistic Manager of Uni-All Group Ltd., Georgia, US.
AUDIT COMMITTEE
We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive.
ITEM 11. EXECUTIVE COMPENSATION
After the change of management in December 2018, we have not paid any compensation to our officers and directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information as of March 17, 2020 regarding the ownership of our common stock by each shareholder known by us to be the beneficial owner of more than five percent of our outstanding shares of common stock, each director and all executive officers and directors as a group. Except as otherwise indicated, each of the shareholders has sole voting and investment power with respect to the shares of common stock beneficially owned.
Officers/Directors | Address | No. of Shares | Percentage |
Yun-Kuang Kung CEO | No., 7 Aly. 1 Ln 143 Sec., 2 Lin'an Rd., North Tainan, Taiwan ROC
| 5,604,344 | 17.32% |
Cheng-Hsing Hsu CFO |
97, Yunong 3th St. Eastern District Tainan City, 70125 Taiwan
| 1,296,000 | 4.00% |
Kuen-Horng Tsai Supervisor |
3F, No.66, Lane 133, Dongfeng Rd. North District Tainan City, 70449 Taiwan
| 96,000 | 0.30% |
Wen-Chi Huang President |
2F., No.217, Sec.2, Taihu Rd. Jinhu Township Kinmen County, 891 Taiwan | 96,000 | 0.30% |
|
Officers and Directors as Total |
7,092,344 |
21.92% |
5% and above shareholders |
|
|
|
|
|
|
|
Honetech, Inc
| No. 196, Fushou St., Xinzhuang Dist. New Taipei City, 242 Taiwan (R.O.C.) | 8,935,400 | 27.61% |
Wei-Cheng Lin
| 4F., No.66, Taihe Central St., Neighborhood 18 Ayi Village, Changhua City Changhua County Taiwan | 4,921,600 | 15.21% |
Chun Zhi Jin
| Room 101, No. 106, 51 Lane Hongxiang Road Songjiang Dist China | 2,040,000 | 6.30% |
34
Su Yueh Chang Tien | No. 76, Sec. 1, Mincyuan Rd. Neighborhood 23 Chenghuang Village, West Central District Tainan Taiwan | 1,999,200 | 6.18% |
Chang-Da Tsai
| Chang-Da Tsai 16F., No. 201, Shennong Rd., Gushan Dist. Kaohsiung City, Taiwan | 5,600,000 | 17.30% |
|
|
|
|
| 5% and above shareholders as Total | 23,496,200 | 72.60% |
(1) The percentages below are based on 32,363,200 shares of our common stock issued and outstanding as of May 15, 2020
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED 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.
From February 16, 2017 (Inception) through April 30, 2018, the Company owed $10,078 to Yoel Rosario Duran, a former officer and director of the Company. In December 2018, all the loans and due owned to the officers and shareholder have been paid off or forgiven by exchange of buggy and computer equipment.
In December 2018, all the loans and due owned to the former officer has been paid off or forgiven.
In October 15, 2019, the company paid $85,000 to Kung Yun-Kuang, its director to acquire subsidiary - Guangzhou Monte Fino Yacht Company Limited.
The Company paid $37,500 consulting fee to Honetech Inc., its controlling shareholder during the period ended December 31, 2019.
The Company paid $60,000 consulting fee to Continental Development Corporation, its related party during the period ended December 31, 2019.
Also, the Company received $424,000 consultancy service income from one of its shareholders during the period ended December 31, 2019.
The Company has been provided free office space by its stockholder. The management determined that such cost is nominal and did not recognize the rent expense in its consolidated financial statements.
Apart from the transactions and balances detailed elsewhere in these accompanying consolidated financial statements, the Company has no other significant or material related party transactions during the periods presented.
35
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
During fiscal year ended December 31, 2019, we incurred approximately $40,000 in fees to our principal independent accountants for professional services rendered in connection with the audit of our financial statements for the fiscal year ended December 31, 2019 and for the reviews of our financial statements for the quarters ended September 30, 2019 and July 31, 2019. The fees for April 30, 2018 audit-related, tax, and other services are: $9,162.
Audit service: | $9,162 |
Audited related services: | $0 |
Tax service: | $0 |
Others: | $0 |
Total: | $9,162 |
ITEM 15. EXHIBITS
The following exhibits are filed as part of this Amended Annual Report.
Exhibits:
31.1 & 31.2 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 & 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.
VIVIC CORP.
/s/ Yun-Kuang Kung
By: Yun-Kuang Kung
Chief Executive Officer
May 15, 2020
36