10-K: Vivic Corp. Reports FY25 Loss, Exits Taiwan Market

Vivic Corp. reported a substantial net loss for fiscal year 2025, exiting the Taiwan market to focus on the United States and Southeast Asia amidst going concern doubts.

Summary

• Vivic Corp. reported a net loss of $3.45 million for the fiscal year ended June 30, 2025, a significant deterioration from a net income of $2.85 million in the prior fiscal year.
• Total revenue from continuing operations plummeted to $44,515 in FY2025, down from $5.95 million in FY2024, representing a 99.25% decrease.
• The company is in the process of winding down and deregistering its Taiwan branch (Vivic Taiwan), expected to be completed by year-end 2025, due to Taiwan's policy prohibiting ship imports from China, where its main suppliers are located.
• A strategic decision was made in August 2025 to concentrate operations in the United States and Southeast Asia, discontinuing pursuit of the Taiwan market.
• The company's independent registered public accounting firm expressed substantial doubt about its ability to continue as a going concern.
• Operating expenses significantly increased to $3.29 million in FY2025 from $0.64 million in FY2024, primarily driven by $2.51 million in stock-based compensation.
• As of June 30, 2025, the company had a working capital deficit of approximately $0.62 million and an accumulated deficit of $5.75 million.
• Vivic Corp. entered into an Electric Catamaran Yacht Co-Development Agreement with Acel Power Inc. and is the exclusive distributor of Monte Fino yachts in Asia and the Middle East.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, evidenced by a substantial net loss, a dramatic revenue decline, and a going concern warning from its auditors. The exit from a key market due to policy issues and the acknowledged ineffectiveness of internal controls further compound the risks. While a strategic shift to the US/Southeast Asia and electric yacht development are noted, the immediate financial instability, high leverage, and significant operational challenges make the stock a high-risk investment with a strong likelihood of further decline. The concentrated ownership and lack of public company experience in management also add to the concerns.

Positives

• The company holds exclusive distribution rights for Monte Fino yachts in Asia and the Middle East, leveraging a well-known brand.
• A strategic focus on a niche market of affluent yacht operators for marine tourism, group tours, business meetings, and fractional ownership aims to differentiate the company from traditional yacht manufacturers.
• An Electric Catamaran Yacht Co-Development Agreement with Acel Power Inc. indicates a move towards eco-friendly and innovative products.
• The Board of Directors was expanded to include new members with extensive experience in technology and financial industries, potentially strengthening governance and strategic direction.
• The company owns its own brand name, VIVIC, which it aims to enhance in Asia and globally.

Negatives

• A net loss of $3,446,751 for FY2025 represents a significant decline from a net income of $2,850,514 in FY2024.
• Total revenue from continuing operations decreased by 99.25% to $44,515 in FY2025 from $5,950,692 in FY2024.
• Gross profit turned into a loss of $82,412 in FY2025, compared to a gross profit of $1,798,320 in FY2024.
• The company reported a working capital deficit of approximately $0.62 million and negative cash flow from operating activities of $458,645 as of June 30, 2025.
• The independent registered public accounting firm expressed substantial doubt about the company's ability to continue as a going concern.
• The dissolution of Vivic Taiwan, a key operational branch, was necessitated by Taiwan's policy prohibiting ship imports from China, impacting the company's main suppliers.
• Disclosure controls and procedures were deemed ineffective as of June 30, 2025, due to a lack of U.S. GAAP-familiar personnel, absence of an oversight committee, and insufficient personnel for segregation of duties.
• The company is highly leveraged, relying on loans from related parties and third parties, and has an accumulated deficit of approximately $5.75 million as of June 30, 2025.
• Stock-based compensation expenses increased significantly to $2,508,783 in FY2025, contributing to the overall net loss.

Risks

• The company's ability to continue as a going concern is in substantial doubt, dependent on continued financial support or securing new financing.
• Future financing is uncertain and may lead to significant dilution for existing shareholders or restrictive debt conditions.
• The company is highly leveraged, and failure to pay or refinance outstanding loans could materially and adversely affect operations.
• A limited operating history and minimal revenues make it difficult to assess future success and expose the company to risks typical of early-stage companies.
• Economic conditions impacting consumer discretionary spending could materially adversely affect business, results of operations, or financial condition.
• Intense competition from well-established companies with greater capital resources, distribution networks, and brand names poses a significant challenge.
• Growth could strain personnel and infrastructure resources, and failure to implement appropriate controls could hinder business plan execution.
• Limited investment in research and development may adversely affect the ability to enhance existing products and develop new ones, impacting competitiveness.
• Reliance on third-party manufacturers, particularly those in China and Taiwan, exposes the company to supply chain disruptions, political instability, and policy changes, including U.S. tariffs.
• Higher fuel costs (petroleum or electric) could increase operational expenses and reduce demand for yachts.
• Changes in credit markets could decrease consumers' ability to finance yacht purchases.
• The business is highly dependent on the continued contributions of Mr. Shang-Chiai Kung (86 years old) and other key management, with no key employee insurance.
• Management's lack of experience operating a public company could lead to increased compliance costs and diversion of attention.
• Failure to develop and protect brand names, trademarks, and intellectual property could adversely affect revenues and financial performance.
• Product liability lawsuits and insufficient insurance coverage could result in substantial liabilities and reputational damage.
• Natural disasters, adverse weather, pandemic outbreaks, boycotts, and geo-political events (e.g., U.S.-China relations, Taiwan Strait tensions) could materially adversely affect business operations and financial markets.
• Inability to establish strategic partnerships and expand distribution channels in new markets (Southeast Asia, Middle East) may hinder growth.
• Inflation could increase operational costs (labor, raw materials, utilities) and reduce the ability to offer competitive prices.
• Taiwan-specific risks include political issues restricting vessel mobility, price-conscious consumers, and seasonal climate impacts on sea tourism.
• Foreign exchange fluctuations, particularly between the New Taiwan Dollar and the U.S. dollar, may affect liquidity and cash flows.
• Limited trading in shares, potential for high volatility, and applicability of penny stock rules could make it difficult for investors to sell shares.
• Concentrated ownership by Mr. Shang-Chiai Kung (60.28% voting power) and other individuals may not align with the interests of minority shareholders.
• Anti-takeover provisions in corporate documents could discourage or delay a change in control.
• Volatility in common share price may subject the company to securities litigation.
• Future issuances of equity or convertible debt securities could result in substantial dilution to current shareholders.
• Significant costs are incurred as a public company, and management must devote substantial time to compliance initiatives.
• Changes to accounting rules or regulations may adversely affect the reporting of results of operations.

Future Outlook

The company expects working capital requirements to be funded through existing funds, cash generated from operations, loans, and further issuances of securities to principal shareholders. It anticipates additional increases in operating expenses and capital expenditures for business development and marketing, which will be financed by further equity securities and debt instruments. The company expects to need to raise additional capital and generate revenues to meet long-term operating requirements. Plans include expanding the yacht brands offered for sale, increasing market territories, potentially becoming an exclusive distributor for yacht manufacturers in the United States and Southeast Asia, and entering other profitable areas within the marine industry. Management also intends to consider adding personnel and implementing improved review procedures for internal controls as positive cash flow is generated.

Management Comments

• "We are dedicated to catering to the needs of affluent yacht operators in the United States and Southeast Asia, who are interested in outdoor yacht recreational activities."
• "Our current primary goal is to become a leading distributor of charter boats globally and thereafter, expand into other areas of high-end boating by, for example, developing a high performance all-electric yacht."
• "Management has determined that the above conditions indicate that it may be probable that the Company would not be able to meet its obligations within one year after the date of issuance of this report."
• "Management will consider the need to add personnel and implement improved review procedures as we begin to generate positive cash flow."

Industry Context

The high-end shipping industry is experiencing growth driven by increasing disposable incomes and a rising interest in outdoor water sports, yacht tourism, and recreational activities. The company recognizes the high cost of yacht ownership and is promoting yacht sharing, luxury charters, and group travel to cater to this trend. It aims to serve a niche market of yacht operators with standardized, energy-efficient, and flexible yachts, believing there are few manufacturers currently targeting this segment. The broader market for traditional high-end yachts remains highly competitive, with established players like Azimut and Ferretti. The introduction of new technologies, such as electric yachts, and new market entrants are expected to intensify the competitive environment.

Management Changes

Corporate Governance

Legal Proceedings

• The company was charged by the SEC on August 22, 2023, for violating Rule 12b-25 by filing a deficient Form NT and an untimely Form 8-K. The company agreed to a cease-and-desist order and paid a $60,000 fine, which was fully settled as of June 30, 2025.
• No other material legal or administrative proceedings are currently pending or known to be contemplated against the company.

Related Party Transactions

• Prepayments of $445,894 were made to Fujian Jiaxin Company Limited, an entity 100% owned by Yun-Kuang Kung (son of Chairman Shang-Chiai Kung).
• Prepayments of $312,169 were made to Weiguan Ship, an entity acquired by Yun-Kuang Kung from Vivic Corp. in July 2023.
• An aggregate of 700,000 shares of common stock, with a fair value of $1,932,000, were issued to Chairman Shang-Chiai Kung and five other directors as prepaid stock compensation for their services.
• 50,000 shares of common stock were issued to Mr. Hong Hsin Lai, the Chief Technology Officer, as stock compensation for his first year of employment.
• A receivable of $2,512,934 from Weiguan Ship (now owned by Yun-Kuang Kung) is outstanding as of June 30, 2025, which is non-interest bearing and payable on demand.
• The company was indebted to Yun-Kuang Kung ($106,198), Shang-Chiai Kung ($178,651), and Liu-Shiang Kung Hwang ($54,205) for unsecured, interest-free, on-demand loans as of June 30, 2025.
• Loans from Taiwan Hua Nan Bank were guaranteed by Yun-Kuang Kung and Kung Hwang Liu Shiang (spouse of Shang-Chiai Kung).

Stakeholder Impact

• Shareholders face significant dilution risk from potential future equity raises, a high risk of investment loss due to going concern doubts, and potential stock price volatility. The concentrated voting power of the Chairman (60.28%) may not align with minority shareholder interests, and no cash dividends are anticipated.
• Employees may see increased hiring in design and engineering roles as the business expands, but also face risks if growth management is ineffective. Executive compensation includes significant stock-based awards.
• Customers in Taiwan will be impacted by the dissolution of Vivic Taiwan, as the company discontinues pursuing that market. The company aims to continue offering customized yachts and after-sales support in its new focus regions.
• Suppliers, particularly those in China, are affected by the discontinuation of Taiwan operations due to import policies. The company's reliance on third-party manufacturers in China and Taiwan introduces supply chain risks.
• Creditors face increased risk due to the company's going concern uncertainty and high leverage. Loans from related parties, being unsecured and interest-free, highlight the company's reliance on insider financial support.

Next Steps

• Complete the wind-down and deregistration of Vivic Taiwan by year-end 2025.
• Focus on promoting sales in the U.S. entity and concentrate operations in the United States and Southeast Asia.
• Expand the yacht brands offered for sale and the territories in which yachts are marketed.
• Seek to become the exclusive distributor for yacht manufacturers in the United States, Southeast Asia, and other territories.
• Enter other profitable areas related to the marine industry.
• Actively pursue additional financing for operations through potential loans and equity issuances.
• Consider adding personnel and implementing improved review procedures for internal controls as positive cash flow is generated.
• Continue collaboration on the development of an electric catamaran yacht with Acel Power Inc.
• Establish various board committees and adopt appropriate charters governing their responsibilities in the foreseeable future.

Key Dates

Recommendation

The company's financial position is severely distressed, marked by a substantial net loss, a drastic 99.25% decline in revenue from continuing operations, and a gross operating loss for FY2025. The auditor's 'going concern' warning, coupled with a working capital deficit and negative operating cash flow, indicates significant doubt about its ability to survive. The strategic exit from the Taiwan market due to policy issues, along with acknowledged ineffective internal controls, further exacerbates operational and governance risks. While a shift to the US/Southeast Asia and electric yacht development are forward-looking, the immediate financial instability, high leverage, and concentrated ownership present an exceptionally high-risk profile. A seasoned investor would view these factors as strong indicators of potential further share price decline and significant capital impairment.

Keywords

Yacht Sales, Going Concern, Taiwan Market Exit, US Market Focus, Southeast Asia Market, Electric Yachts, SEC Filing, Financial Performance, Stock Compensation, Corporate Governance, Related Party Transactions, Risk Factors, Public Company Compliance, Share Dilution, Supply Chain Risk, Geopolitical Risk, Monte Fino, VIVC