Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Plant and equipment

v3.21.1
Plant and equipment
12 Months Ended
Dec. 31, 2020
Plant and equipment  
Plant and equipment

6.            Plant and equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Computer

    

 

    

 

 

 

 

    

 

    

 

 

 

Furniture 

 

 hardware

 

 

 

 

 

 

 

 

Production 

 

 

 

 

and 

 

 and 

 

 

 

Leasehold 

 

Right-of-

 

tooling 

 

 

 

    

equipment

    

software

    

Vehicles

    

Improvements

    

use assets

    

and molds

    

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost:

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

 

  

 

 

  

 

December 31, 2018

 

 

364,510

 

 

98,338

 

 

286,050

 

 

283,316

 

 

 —

 

 

3,353,985

 

 

4,386,199

Additions

 

 

56,854

 

 

107,907

 

 

 —

 

 

99,778

 

 

 —

 

 

2,554,467

 

 

2,819,006

Adoption of IFRS 16

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

1,590,456

 

 

 —

 

 

1,590,456

Disposals

 

 

 —

 

 

(1,659)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,659)

Foreign exchange translation difference

 

 

16,994

 

 

4,584

 

 

13,336

 

 

13,209

 

 

 —

 

 

156,374

 

 

204,497

December 31, 2019

 

 

438,358

 

 

209,170

 

 

299,386

 

 

396,303

 

 

1,590,456

 

 

6,064,826

 

 

8,998,499

Additions

 

 

32,937

 

 

208,294

 

 

1,090,673

 

 

64,495

 

 

465,312

 

 

1,738,462

 

 

3,600,173

Disposals/write off

 

 

 —

 

 

 —

 

 

(10,907)

 

 

(28,366)

 

 

 —

 

 

(299,606)

 

 

(338,879)

Lease termination and derecognition1,2

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(425,932)

 

 

 —

 

 

(425,932)

Foreign exchange translation difference

 

 

6,528

 

 

3,734

 

 

5,445

 

 

2,944

 

 

30,262

 

 

110,287

 

 

159,200

December 31, 2020

 

 

477,823

 

 

421,198

 

 

1,384,597

 

 

435,376

 

 

1,660,098

 

 

7,613,969

 

 

11,993,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

 

  

 

 

 

December 31, 2018

 

 

170,132

 

 

48,423

 

 

158,672

 

 

84,569

 

 

 —

 

 

 —

 

 

461,796

Additions

 

 

60,159

 

 

50,611

 

 

90,519

 

 

94,087

 

 

512,902

 

 

 —

 

 

808,278

Disposals

 

 

 —

 

 

(967)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(967)

Foreign exchange translation difference

 

 

7,932

 

 

2,257

 

 

7,397

 

 

3,943

 

 

 —

 

 

 —

 

 

21,529

December 31, 2019

 

 

238,223

 

 

100,324

 

 

256,588

 

 

182,599

 

 

512,902

 

 

 —

 

 

1,290,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions

 

 

 67,030

 

 

96,191

 

 

41,005

 

 

112,591

 

 

414,102

 

 

903,756

 

 

1,634,675

Disposals/write off

 

 

 —

 

 

 —

 

 

(7,588)

 

 

(23,119)

 

 

 —

 

 

(9,847)

 

 

(40,554)

Lease termination and derecognition1,2

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(204,590)

 

 

 —

 

 

(204,590)

Foreign exchange translation difference

 

 

4,068

 

 

1,816

 

 

4,667

 

 

1,685

 

 

10,350

 

 

 —

 

 

22,586

December 31, 2020

 

 

309,321

 

 

198,331

 

 

294,672

 

 

273,756

 

 

732,764

 

 

893,909

 

 

2,702,753

Net book value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

200,135

 

 

108,846

 

 

42,798

 

 

213,704

 

 

1,077,554

 

 

6,064,826

 

 

7,707,863

December 31, 2020

 

 

168,502

 

 

222,867

 

 

1,089,925

 

 

161,620

 

 

927,334

 

 

6,720,060

 

 

9,290,308

 

1  The Company entered into a sublease agreement for its office space in Los Angeles, USA, with effect from February 1, 2020. As a result of the sublease, the Company derecognized the right-of-use asset relating to the head lease with a cost of $298,708 and accumulated amortization of $120,131 (see Note 7 for further information on the net investment in sublease).

2  The Company terminated one of its warehouse leases on January 31, 2020. As a result of the termination, the Company derecognized the right-of-use asset of the warehouse with a cost of $127,224 and accumulated amortization of $84,459 (see Note 10 for further information on the termination of the lease)

On September 18, 2017, the Company entered into a Manufacturing Agreement with Zongshen.  Under the Manufacturing Agreement, the Company agrees to reimburse Zongshen for the cost of prototype tooling and molds estimated to be CNY  ¥9.5 million ($1.4 million), which was payable on or before March 18, 2018, subject to a 10% holdback, and mass production tooling and molds estimated to be CNY ¥29 million ($4.3 million), which shall be payable as to 50% when Zongshen commences manufacturing the tooling and molds, 40% when Zongshen completes manufacturing the tooling and molds and 10% upon delivery to the Company of the first production vehicle.

As at December 31, 2020, the Company has commenced commercial production and delivered the first production vehicle. Therefore, the Company has paid 100% of the prototype tooling and molds with an actual cost of CNY ¥10.1 million ($1.7 million) and 80% of the mass production tooling and molds with an actual cost of CNY ¥40 million ($6.2 million). The unpaid amount of mass production tooling and molds is included in accrued liabilities as at December 31, 2020.

As assessed by the Company, the prototype and mass production tooling and molds with a net book value of $289,759 were written off in the year ended December 31, 2020 due to technical changes; as the molds cannot be adapted for use to produce the current version of the SOLO. The remaining prototype and mass production tooling and molds are estimated to be used for three years to produce the SOLO. These production tooling and molds will be depreciated on a straight-line basis over a three year period as the assets were custom built for the production of the current SOLO and will be retired at the end of the production run. The Company estimates that the residual value of the assets will be minimal at the end of the three year period. During the year ended December 31, 2020, $903,756  (2019 and 2018 - $Nil) was charged to amortization expenses. No amounts were allocated to inventory or charged to cost of goods sold during the period as the SOLOs completed as at December 31, 2020 are intended to be used as marketing vehicles for customers to test drive. The Company does not intend to sell these marketing vehicles to customers in future periods.

On October 16, 2017, the then CEO of the Company (the “Pledgor”) entered into a Share Pledge Agreement (“Share Pledge”) to guarantee the payment by the Company for the cost of the prototype tooling and molds estimated to be CNY ¥9.5 million ($1.4 million) to Zongshen through the pledge of 400,000 common shares of the Company. The Company approved its obligations under the Share Pledge and had agreed to reimburse the Pledgor on a one for one basis for any pledged shares realized by Zongshen. As at December 31, 2020, the Company has paid 100% of the cost of the prototype tooling and molds and, accordingly, the Share Pledge has been terminated.