10-K: Vivic Corp. Reports $1.5 Million Net Income for 2023 Driven by Discontinued Operations

Vivic Corp. reports a net income of $1.5 million for 2023, primarily due to a gain from the disposal of a subsidiary, while continuing operations show a net loss.

Summary

• Vivic Corp., a Nevada holding company, reported a net income of $1.5 million for the year ended December 31, 2023, a significant turnaround from a net loss of $981,552 in 2022.
• The company's revenue from continuing operations was $1.6 million in 2023, a substantial increase from no revenue in 2022, primarily due to the commencement of yacht sales in Taiwan.
• The cost of revenue for continuing operations was $1.39 million in 2023, resulting in a gross profit of $212,214.
• General and administrative expenses for continuing operations increased to $395,324 in 2023 from $216,009 in 2022.
• The net loss from continuing operations was $241,360 in 2023, compared to a net loss of $226,283 in 2022.
• A significant gain of $1.86 million from the disposal of the Weiguan Ship subsidiary contributed to the overall net income.
• The company's working capital was $2.19 million as of December 31, 2023, which includes a related party receivable of $2.59 million.
• The company has an accumulated deficit of approximately $3.3 million as of December 31, 2023.
• The company's independent auditor has expressed substantial doubt about its ability to continue as a going concern.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While the company achieved a net income due to a one-off gain, the core business is still operating at a loss, and there are significant concerns about its ability to continue as a going concern. The company is also facing challenges in terms of competition, supply chain, and management experience. The sentiment is therefore negative overall.

Positives

• The company successfully generated $1.6 million in revenue from yacht sales in 2023, a significant increase from no revenue in 2022.
• The disposal of the Weiguan Ship subsidiary resulted in a substantial gain of $1.86 million, boosting the company's overall net income.
• The company has a working capital of $2.19 million as of December 31, 2023.

Negatives

• The company's continuing operations resulted in a net loss of $241,360 in 2023.
• General and administrative expenses increased by 83.01% to $395,324 in 2023.
• The company has an accumulated deficit of approximately $3.3 million as of December 31, 2023.
• The company's independent auditor has expressed substantial doubt about its ability to continue as a going concern.

Risks

• The company's ability to continue as a going concern is uncertain, as highlighted by the independent auditor's report.
• The company is dependent on continued financial support from related parties and may need to secure additional financing.
• The company has a limited operating history and has incurred operating losses to date.
• The company faces competition in the yacht sales market from well-established companies.
• The company relies on third parties for manufacturing, which exposes it to supply chain risks.
• The company's business is subject to economic conditions that impact consumer spending.
• The company's management has limited experience operating a public company.
• The company's stock price is likely to be volatile and could fluctuate widely.

Future Outlook

The company expects working capital requirements to be funded through existing funds, related party receivables, and further issuances of securities. The company anticipates additional increases in operating expenses and capital expenditures related to business development and marketing. The company expects to need to raise additional capital and generate revenues to meet long-term operating requirements.

Management Comments

• Management believes that the knowledge and experience of our management and our relationship with Kha Shing provides us with a sound basis upon which to grow our business and then expand into other areas related to pleasure crafts.
• Management is responsible for establishing and maintaining adequate internal controls over financial reporting and for the assessment of the effectiveness of those internal controls.
• Management will consider the need to add personnel and implement improved review procedures as we begin to generate positive cash flow.

Industry Context

The company operates in the competitive yacht manufacturing and sales industry, focusing on the high-end market and catering to affluent yacht operators. The industry is experiencing a shift towards more eco-friendly yachts, including electric and liquified natural gas options. The company is positioning itself to capitalize on the growing demand for charter boats and high-performance electric yachts.

Comparison to Industry Standards

• The document mentions competitors such as Azimut and Ferretti, which are well-established players in the luxury yacht market with greater resources and brand recognition.
• Vivic Corp. is attempting to differentiate itself by focusing on the yacht operator market, which requires standardized configurations, greater open space, and energy efficiencies, a niche not directly targeted by most large competitors.
• The company's revenue of $1.6 million in 2023 is relatively small compared to the larger players in the industry, but it represents a significant growth from no revenue in the previous year.
• The company's focus on the Taiwanese market and its exclusive distribution agreement with Monte Fino are strategic advantages, but it faces competition from other Taiwanese yacht manufacturers such as Amer Yachts Company, HAISEA Yacht Company and HENSEN Yacht Company.

Legal Proceedings

• The company was charged by the Securities and Exchange Commission with violating Rule 12b-25 by filing a Form 12b-25 Notification of Late Filing with respect to its Report on Form 10-Q for the quarter ended March 31, 2022, without including sufficient detail under the circumstances presented as to why the Form 10-Q could not be timely filed.
• The company agreed to a cease-and-desist order and to pay a fine of $60,000.

Related Party Transactions

• The company has significant related party transactions, including loans and receivables with related parties.
• The company relies on advances from related parties to fund its operations.
• The company entered a trilateral Corporation Agreement with Yun-Kuang Kung and Guangdong Weiguan Shipping Co., Ltd to engage in yacht development leasing, dock operations, and related businesses in mainland China.

Stakeholder Impact

• Shareholders face the risk of dilution from potential equity issuances.
• Employees may be affected by the company's financial instability and potential restructuring.
• Customers may be impacted by the company's ability to deliver products and services.
• Suppliers may face uncertainty regarding the company's ability to meet its financial obligations.
• Creditors face the risk of non-payment due to the company's financial difficulties.

Next Steps

• The company will seek to expand the yacht brands it offers for sale.
• The company will seek to expand the territories in which it markets its yachts.
• The company will seek to become the exclusive distributor for yacht manufacturers in Taiwan and other territories.
• The company will seek to enter other areas related to the marine industry where it believes it can be profitable.
• The company will continue to pursue additional financing for its operations through loans and the sale of equity.

Key Dates

Keywords

yacht sales, marine industry, Monte Fino yachts, Taiwan, discontinued operations, financial results, going concern, related party transactions, electric yachts, charter boats