Exhibit 99.1 

 

Electrameccanica Vehicles Corp.

 

Interim Consolidated Financial Statements

 

June 30, 2018

 

Unaudited - Expressed in Canadian Dollars

  

 

 

  

Electrameccanica Vehicles Corp.

Interim Consolidated Statements of Financial Position

(Expressed in Canadian dollars)

  

   Note   June 30, 2018
(Unaudited)
   December 31, 2017 
ASSETS               
Current assets               
Cash and cash equivalents   4   $4,235,315   $8,610,996 
Receivables   5    627,677    243,639 
Prepaid expenses        762,816    920,146 
Inventory        274,518    232,903 
         5,900,326    10,007,684 

Non-current assets

               
Restricted cash        108,995    - 
Plant and equipment   6    4,705,516    1,393,683 
Goodwill and other intangible assets   7    1,239,762    1,260,014 
TOTAL ASSETS       $11,954,599   $12,661,381 
                
LIABILITIES               
Current liabilities               
Bank overdraft and demand loan   9   $-   $123,637 
Trade payables and accrued liabilities   8    2,132,302    1,123,790 
Customer deposits        410,774    447,071 
Shareholder loan   17    8,306    10,383 
Promissory note   7    -    1,500,000 
Deferred income tax        149,794    149,794 
         2,701,176    3,354,675 
                
Non-current liabilities               
Derivative liability1   10    1,306,603    3,655,690 
TOTAL LIABILITIES        4,007,779    7,010,365 
                
EQUITY               
Share capital   11    28,919,134    22,718,282 
Common share subscription        -    750,000 
Share-based payment reserve   12    5,383,427    3,518,286 
Deficit        (26,355,741)   (21,335,552)
TOTAL EQUITY        7,946,820    5,651,016 
TOTAL LIABILITIES AND EQUITY       $11,954,599   $12,661,381 

 

Commitments (Notes 6 and 9)

Subsequent events (Note 20)

 

On behalf of the Board of Directors.

 

“Steven Sanders”_____________ “Luisa Ingargiola”____________
Director Director

 

 

1 Footnote: The warrant derivative liability is valued at fair value in accordance with International Financial Reporting Standards (“IFRS”). There are no circumstances in which the Company would be required to pay cash upon exercise or expiry of the warrants. See Note 12.

 

The accompanying notes are an integral part of these interim consolidated financial statements

  

  2

 

  

Electrameccanica Vehicles Corp.

Interim Consolidated Statements of Comprehensive Loss

(Unaudited - Expressed in Canadian dollars)

 

       3 months ended   6 months ended 
   Note   June 30,
2018
   June 30,
2017
   June 30,
2018
   June 30,
2017
 
                     
Revenue       $279,366   $-   $445,499   $- 
Cost of revenue        192,651    -    295,319    - 
Gross profit        86,715    -    150,180    - 
                          
Operating expenses                         
Amortization   6    77,386    30,294    128,415    55,204 
General and administrative expenses   13    934,256    445,146    1,909,473    927,955 
Research and development expenses   14    1,718,599    621,321    3,278,776    1,905,050 
Sales and marketing expenses   15    196,614    165,972    476,244    290,238 
Stock-based compensation expense   11    1,094,181    289,723    1,884,415    537,379 
Share-based payment expense        622,877    -    622,877      
         4,643,913    (1,552,456)   8,300,200    (3,715,826)
                          
Loss before other items        (4,557,198)   (1,552,456)   (8,150,020)   (3,715,826)
                          
Other items                         
Accretion interest expense        -    20,502         40,779 
Changes in fair value of warrant derivative   10    (1,860,027)   -    (3,026,054)   - 
Foreign exchange loss/(gain)        (80,956)   2,009    (103,777)   7,931 
                          
Net and comprehensive loss       $(2,616,215)  $(1,574,967)  $(5,020,189)  $(3,764,536)
                          
Loss per share – basic and fully diluted       $(0.11)  $(0.04)  $(0.20)  $(0.09)
                          
Weighted average number of shares outstanding – basic and fully diluted   11    24,590,906    21,326,700    24,571,944    21,157,904 

 

The accompanying notes are an integral part of these interim consolidated financial statements

  

  3

 

  

Electrameccanica Vehicles Corp.

Interim Consolidated Statements of Changes in Equity

(Expressed in Canadian dollars)

 

       Share capital                         
   Note   Number of
shares
   Amount   Share
subscription
   Share
issue cost
   Share-based
payment
reserve
   Equity
component
reserve
   Deficit   Total 
                                     
Balance at Dec 31, 2016        20,891,794   $12,998,482   $101,500   $(1,614,486)  $2,351,144   $39,130   $(9,969,180)  $3,906,590 
Shares issued for cash        514,000    1,028,000    (100,000)   (121,159)   -    -    -    806,841 
Share issued for finders fees        2,500    5,000    -    -    3,223    -    -    8,223 
Stock-based compensation        -    -    -    -    537,379    -    -    537,379 
Net and comprehensive loss for the period        -    -    -    -    -    -    (3,764,536)   (3,733,716)
Balance at June 30, 2017        21,408,294   $14,031,482   $1,500   $(1,735,645)  $2,891,746   $39,130   $(13,733,716)  $1,494,497 
                                              
Balance at December 31, 2017        23,794,106   $25,789,209   $750,000   $(3,070,927)  $3,518,286   $-   $(21,335,552)  $5,651,016 
Shares issued for cash   11    1,182,543    6,897,647    (750,000)   (698,052)   -    -    -    5,449,595 
Shares issued for services   11    75,000    622,877    -    -    -    -    -    622,877 
Shares issued on exercise of options   11    6,198    31,669    -    -    (19,274)   -    -    12,395 
Adjustment for warrant derivative liability   10    -    (676,967)   -    -    -    -    -    (676,967)
Shares issued for finders fees   11    2,286    23,678    -    -    -    -    -    23,678 
Stock-based compensation   11    -    -    -    -    1,884,415    -    -    1.884.415 
Net and comprehensive loss for the period        -    -    -    -    -    -    (5,020,189)   (5,020,189)
Balance at June 30, 2018        25,060,133   $32,688,113   $-   $(3,768,979)  $5,383,427   $-   $(26,355,741)  $7,946,820 

 

During the year ended December 31, 2016, the Company completed a 1:5 forward share split and on May 15, 2018 the Company completed a reverse share split on a 2:1 basis, all references to number of shares have been retroactively adjusted. See Note 11 for further details.

 

The accompanying notes are an integral part of these interim consolidated financial statements

  

  4

 

  

Electrameccanica Vehicles Corp.

Interim Consolidated Statements of Cash Flows

(Unaudited - Expressed in Canadian dollars)

 

   3 months ended   6 months ended 
                 
   June 30,
2018
   June 30,
2017
   June 30,
2018
   June 30,
 2017
 
Operating activities                    
Loss for the period  $(2,616,215)  $(1,574,967)  $(5,020,189)  $(3,764,536)
Adjustments for:                    
Amortization   77,386    30,294    128,415    55,204 
Stock-based compensation expense   1,094,181    289,723    1,884,415    537,379 
Non-cash services   622,877    -    622,877    - 
Interest accretion expense   -    20,502    -    40,779 
Change in fair value of warrant derivative   (1,860,027)   -    (3,026,054)   - 
Changes in non-cash working capital items:                    
Receivables   (287,506)   161,302    (384,038)   87,214 
Prepaid expenses   44,058    (16,997)   157,330    17,480 
Inventory   (16,425)   -    (41,615)   (3,475)
Trades payable and accrued liabilities   (10,156)   42,978    442,390    105,393 
Customer deposits   2,930    9,500    (36,297)   32,750 
Net cash flows used in operating activities   (2,948,897)   (1,037,665)   (5,272,766)   (2,891,812)
                     
Investing activities                    
Restricted cash   (1,092)   -    (108,995)   - 
Expenditures on plant and equipment   (1,677,971)   (10,314)   (2,853,874)   (137,510)
Purchase of Intermeccanica   -    -    -    (100,000)
Expenditures on trademarks and patents   -    (21,190)   -    (35,253)
Net cash flows used in investing activities   (1,679,063)   (31,504)   (2,962,869)   (272,763)
                     
Financing activities                    
Repayment of bank loan   -    -    (123,637)   - 
Repayment of shareholder loan   (1,038)   -    (2,077)   - 
Repayment of promissory note   -    -    (1,500,000)   - 
Proceeds on issuance of common shares – net of issue costs   3,002,986    456,107    5,485,668    837,064 
Net cash flows from financing activities   3,001,948    456,107    3,859,954    837,064 
                     
Decrease in cash and cash equivalents   (1,626,012)   (613,062)   (4,375,681)   (2,327,511)
                     
Cash and cash equivalents, beginning   5,861,327    2,201,834    8,610,996    3,916,283 
Cash and cash equivalents, ending  $4,235,315   $1,588,772   $4,235,315   $1,588,772 

 

The accompanying notes are an integral part of these interim consolidated financial statements

  

  5

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

1.           Nature and continuance of operations

 

Electrameccanica Vehicles Corp (the “Company”) was incorporated on February 16, 2015, under the laws of the province of British Columbia, Canada, and its principal activity is the development and manufacture of electric vehicles. The Company acquired Intermeccanica International Inc. (“Intermeccanica”) on October 18, 2017, and its principal activity is the development and manufacture of high end custom built vehicles. On January 22, 2018 the Company incorporated a wholly-owned subsidiary EMV Automotive USA Inc. in Nevada, USA.

 

The head office and principal address of the Company are located at 102 East 1st Avenue, Vancouver, British Columbia, Canada, V5T 1A4.

 

These consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. As at June 30, 2018, the Company’s principal activity, the development and manufacture of electric vehicles, is in the development stage, and the Company’s continuation as a going concern is dependent upon the successful results from its electric vehicle development and manufacturing activities and its ability to attain profitable operations and generate funds there from and/or raise equity capital or borrowings sufficient to meet current and future obligations. It is anticipated that significant additional funding will be required. These factors indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. Management intends to finance its operations over the next twelve months through private placement of equity capital. Should the Company be unable to continue as a going concern, the net realizable value of its assets may be materially less than the amounts on its statement of financial position.

 

2.           Basis of preparation and significant accounting policies

 

The financial statements were authorized for issue on August 13, 2018 by the directors of the Company.

 

Statement of compliance with International Financial Reporting Standards

These interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). Therefore, these financial statements comply with International Accounting Standards (“IAS”) 34, Interim Financial Reporting.

 

Basis of preparation

The financial statements of the Company have been prepared on an accrual basis and are based on historical costs, modified where applicable. The Company’s functional and presentation currency is the Canadian dollar.

 

Consolidation

The interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, EMV Automotive USA Inc., and Intermeccanica from the date of its acquisition on October 18, 2017 (Note 7). Inter-company balances and transactions, including unrealized income and expenses arising from inter-company transactions, are eliminated on consolidation.

 

Significant estimates and assumptions

The preparation of financial statements in accordance with IFRS requires the Company to make estimates and assumptions concerning the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

 

Estimates and assumptions where there is significant risk of material adjustments to assets and liabilities in future accounting periods include the fair value of the identifiable assets and liabilities acquired from Intermeccanica, the estimated recoverable amount of goodwill, intangible assets and other long-lived assets, the useful lives of plant and equipment, fair value measurements for financial instruments and share-based payments, and the recoverability and measurement of deferred tax assets.

 

  6

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

Significant judgments

The preparation of financial statements in accordance with IFRS requires the Company to make judgments, apart from those involving estimates, in applying accounting policies. The most significant judgments in applying the Company’s financial statements include:

 

-The assessment of the Company’s ability to continue as a going concern and whether there are events or conditions that may give rise to significant uncertainty;
-the classification of financial instruments; and
-the calculation of income taxes require judgement in interpreting tax rules and regulations.

 

Change in accounting policy - Financial Instruments

 

The Company adopted the requirements of IFRS 9 Financial Instruments (“IFRS 9”) as of January 1, 2018. IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 utilizes a revised model for recognition and measurement of financial instruments and a single, forward-looking “expected loss” impairment model. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward in IFRS 9, so the Company’s accounting policy with respect to financial liabilities is unchanged. As a result of the adoption of IFRS 9, management has changed its accounting policy for financial assets retrospectively, for assets that continued to be recognized at the date of initial application. The change did not impact the carrying value of any financial assets or financial liabilities on the transition date.

 

The following is the Company’s new accounting policy for financial instruments under IFRS 9:

 

The Company classifies its financial instruments in the following categories: at fair value through profit or loss (“FVTPL”), at fair value through other comprehensive income (loss) (“FVTOCI”) or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to measure them at FVTPL.

 

The Company completed a detailed assessment of its financial assets and liabilities as at January 1, 2018. The following table shows the original classification under IAS 39 and the new classification under IFRS 9:

 

Financial assets/liabilities Original classification IAS 39 New classification IFRS 9
Bank loan Amortized cost Amortized cost
Cash and cash equivalents Amortized cost Amortized cost
Accounts receivables Amortized cost Amortized cost
Accounts payable and accrued liabilities Amortized cost Amortized cost
Loans Amortized cost Amortized cost
Warrant derivative liability FVTPL FVTPL

 

The Company did not restate prior periods as it recognized the effects of retrospective application to shareholders’ equity at the beginning of the 2018 annual reporting period, which also includes the date of initial application. The adoption of IFRS 9 resulted in no impact to the opening accumulated deficit nor to the opening balance of accumulated comprehensive income on January 1, 2018.

 

Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment.

 

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the consolidated statements of comprehensive loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the consolidated statements of comprehensive loss in the period in which they arise.

 

  7

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in the consolidated statements of comprehensive loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

 

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in the consolidated statements of net (loss) income.

 

Changes in Accounting Policies – Revenue from contracts with customers

 

The Company adopted all of the requirements of IFRS 15 Revenue from Contracts with Customers (“IFRS 15”) as of January 1, 2018. IFRS 15 utilizes a methodical framework for entities to follow in order to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The change did not impact the cumulated revenue recognized or the related assets and liabilities on the transition date.

 

The following is the Company’s new accounting policy for revenue from contracts with customers under IFRS 15:

 

Revenue is recognized to the extent that the amount of revenue can be measured reliably and collection is probable.

 

Part sales:

Sales of parts are recognized when the Company has transferred control to the customer which generally occurs upon shipment.

 

Services, repairs and support services:

Services, repairs and support services are recognized in the accounting period when the services are rendered.

 

Sales of vehicles:

The Company manufactures and sells custom built vehicles typically on fixed fee arrangements with its customers. Revenue is recognized in the accounting period in which the services are rendered, by reference to the stage of completion. The stage of completion is determined as a percentage based on the amount of costs incurred compared to the estimated cost of completion. Revenue recognized in excess of amounts billed is recorded as accounts receivable. Amounts received in excess of work performed is recorded as deferred revenue.

 

Cash and cash equivalents

Cash and cash equivalents include cash and short-term investments with original maturities of less than 90 days and are presented at cost, which approximates market value.

 

Inventory

Inventory consists of parts held for resale or for use in fixed fee contracts and is valued at the lower of cost and net realizable value. Cost is determined on the first-in, first-out basis.

 

Trademarks and patents

The Company expenses legal fees and filing costs associated with the development of its trademarks and patents.

 

Plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses.

 

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of comprehensive loss during the financial period in which they are incurred.

  

  8

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in the statement of comprehensive loss.

 

Amortization is calculated on a straight-line method to write off the cost of the assets to their residual values over their estimated useful lives. The amortization rates applicable to each category of property, plant and equipment are as follows:

 

Class of plant and equipment  Amortization rate 
Office furniture and equipment   20%
Shop equipment   20%
Computer equipment   33%
Computer software   50%
Vehicles   33%
Leasehold improvement   over term of lease 
Tooling   20%
Production molds   per unit produced 

 

Share-based payments

Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using a Black–Scholes pricing model. The number of options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

 

Loss per share

Basic loss per share is calculated by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. For all periods presented, the loss attributable to common shareholders equals the reported loss attributable to owners of the Company. Fully diluted loss per share is calculated by the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of fully diluted loss per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period.

 

Research and development costs

Research costs are expensed when incurred and are stated net of government grants. Development costs including direct material, direct labour and contract service costs are capitalized as intangible assets when the Company can demonstrate that the technical feasibility of the project has been established; the Company intends to complete the asset for use or sale and has the ability to do so; the asset can generate probable future economic benefits; the technical and financial resources are available to complete the development; and the Company can reliably measure the expenditure attributable to the intangible asset during its development. After initial recognition, internally generated intangible assets are recorded at cost less accumulated amortization and accumulated impairment losses. These costs are amortized on a straight-line basis over the estimated useful life. To date, the Company did not have any development costs that met the capitalization criteria.

 

Impairment of assets

The carrying amount of the Company’s long-lived assets with finite useful lives (which include plant and equipment and intangible assets) is reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in the statement of comprehensive loss.

 

The recoverable amount of assets is the greater of an asset’s fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

 

An impairment loss is only reversed if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount. Any reversal of impairment cannot increase the carrying value of the asset to an amount higher than the carrying amount that would have been determined had no impairment loss been recognized in previous years.

  

  9

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if indicators of impairment exist.

 

Income taxes

Current income tax:

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income. Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

 

Deferred income tax:

Deferred income tax is recognized, using the asset and liability method, on temporary differences at the reporting date arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

 

3.           Accounting standards issued but not yet effective

 

New standard IFRS 16 “Leases”

This new standard replaces IAS 17 “Leases” and the related interpretative guidance. IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a service contract on the basis of whether the customer controls the asset being leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, on-balance sheet accounting model that is similar to current finance lease accounting, with limited exceptions for short-term leases or leases of low value assets. Lessor accounting is not substantially changed. The standard is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted for entities that have adopted IFRS 15.

 

The Company has not early adopted this new standard and is currently assessing the impact that this standard will have on its financial statements.

 

Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s financial statements.

 

4.           Cash and cash equivalents

 

For the purposes of the cash flow statement, cash and cash equivalents comprise the following balances with original maturity of less than 90 days:

 

   June 30,
2018
   December 31,
2017
 
Cash  $4,035,315   $6,715,996 
Cash equivalent   200,000    1,895,000 
   $4,235,315   $8,610,996 

 

  10

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

5.       Receivables

 

   June 30,
2018
   December 31,
2017
 
Trade receivable  $331,500   $154,698 
GST receivable   289,303    84,566 
IRAP contribution receivable   3,000    - 
GIC interest receivable   3,874    4,375 
   $627,677   $243,639 

 

6.       Plant and equipment

 

   Furniture 
and
equipment
   Computer
hardware 
and
software
   Vehicles   Leasehold
Improvements
   Production
molds 
deposit
   Total 
                         
Cost:                              
At December 31, 2016  $44,209   $18,897   $173,213   $12,146   $-   $248,465 
Additions   246,634    54,757    216,837    89,055    914,060    1,521,343 
December 31, 2017   290,843    73,654    390,050    101,201    914,060    1,769,808 
Additions   70,075    36,193    (2,001)   17,145    3,298,583    3,419,995 
June 30, 2018   360,918    109,847    388,049    118,346    4,212,643    5,189,803 
                               
Amortization:                              
At December 31, 2016   7,112    2,514    11,666    1,904    -    23,196 
Charge for the year   181,495    24,633    74,098    72,703    -    352,929 
At December 31, 2017   188,607    27,147    85,764    74,607    -    376,125 
Charge for the period   17,964    17,110    64,744    8,344    -    108,162 
At June 30, 2018   206,571    44,257    150,508    82,951    -    484,287 
                               
Net book value:                              
At December 31, 2017  $102,237   $46,507   $304,286   $26,594   $914,060   $1,393,683 
At June 30, 2018  $154,347   $65,590   $237,541   $35,395   $4,212,643   $4,705,516 

 

On September 29, 2017 the Company entered into a manufacturing agreement with Chongqing Zongshen Automobile Co., Ltd. (“Zongshen”). Under the agreement the Company agrees to reimburse Zongshen for the cost of prototype tooling and molds estimated to be CNY ¥9.5 million (CAD $1.8 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 ¥29.3 million (CAD $6.0 million), which shall be payable 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. At June 30, 2018 the Company had paid 90% of prototype tooling and molds and 32% of the mass production tooling and molds.

 

Under the agreement, the Company agreed that the minimum purchase commitments for units of the Solo vehicle are to be as follows: in calendar 2018, 5,000; in 2019, 20,000; and in 2020, 50,000, and which shall be payable following issue of Company’s purchase orders as follows: 30% after Zongshen schedules production, and 70% after accepted vehicle delivery.

 

On October 16, 2017 the President and CEO of the Company (as “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 (CAD $1.8 million) to Zongshen through the pledge of 800,000 common shares of the Company. The Company approved its obligations under the Share Pledge and has agreed to reimburse the Pledgor on a one for one basis for any pledged shares realized by Zongshen.

 

  11

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

7.           Acquisition of Intermeccanica

 

On October 18, 2017 the Company completed the acquisition of all of the outstanding shares of Intermeccanica, a developer and manufacturer of high end custom built vehicles and the contract assembler of the Company’s electric vehicles located in Greater Vancouver, BC. The acquisition of Intermeccanica is expected to accelerate the Company’s manufacture and delivery of its vehicles to customers, and the Company will develop and manufacture electric versions of Intermeccanica’s custom built vehicles.

 

Total purchase consideration was $2,500,000. On or before October 18, 2017 the Company paid $1,000,000, and entered into a Promissory Note for the balance of $1,500,000. The Promissory Note which bore interest at 5% per annum and was secured over the assets of Intermeccanica was paid in full on January 28, 2018.

 

Goodwill and other intangible assets recognized was primarily attributed to expected synergies arising from the Intermeccanica acquisition and the expertise and reputation of the assembled management and workforce. Goodwill is not expected to be deductible for income tax purposes. During the six month period ended June 30, 2018 the Company recorded amortization of $20,252 relating to the acquired intangible assets. No further impairment was identified at June 30, 2018.

 

Total goodwill and other intangible assets consist of:

 

   June 30,
2018
   December 31,
2017
 
Domain name  $2,170   $2,170 
Identifiable intangibles on acquisition of Intermeccanica   537,748    558,000 
Goodwill and other intangibles on acquisition of Intermeccanica   699,844    699,844 
   $1,239,762   $1,260,014 

 

8.           Trade payables and accrued liabilities

   June 30,
2018
   December 31,
2017
 
Trade payables  $1,153,067   $457,520 
Wages payables   81,988    62,110 
Due to related parties (Note 17)   78,993    16,814 
Accrued liabilities   818,254    587,346 
   $2,132,302   $1,123,790 

 

9.           Commitments

 

On February 2, 2018 the joint business line of credit with Bank of Montreal (BMO), which was held by Intermeccanica, its President and his wife was paid in full. The line of credit was secured by a general security agreement, a specific charge over a vehicle, and a charge over the personal home of the President and his wife.

 

Lease obligations relate to the Company’s rent of office space and warehouse space. The term of the leases expire on November 1, 2020 and July 1, 2020 with the Company holding an option to renew for a further five years for the office space.

 

As at June 30, 2018, future payments required under non-cancellable operating leases contracted for but not capitalized in the financial statements are as follows:

 

   June 30,
2018
   December 31,
2017
 
Payable not later than one year  $330,226   $310,034 
Payable later than one year and not later than five years   355,169    507,036 
Payable later than five years   -    - 
   $685,395   $817,070 

 

  12

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

10.         Derivative liability

 

The exercise price of certain warrants is denominated in US dollars; however, the functional currency of the Company is the Canadian dollar. Consequently, the value of the proceeds on exercise is not fixed and will vary based on foreign exchange rate movements. The warrants are therefore a derivative and are required to be recognized as a derivate liability and measured at fair value at each reporting period. Any changes in fair value from period to period are recorded as non-cash gain or loss in the consolidated statement of net loss and comprehensive loss. Upon exercise, the holders will pay the Company the respective exercise price for each warrant exercised in exchange for one common share of the Company and the fair value at the date of exercise and the associated non-cash liability will be reclassified to share capital. The non-cash liability associated with any warrants that expire unexercised will be recorded as a gain in the consolidated statement of net loss and comprehensive loss. There are no circumstances in which the Company would be required to pay any cash upon exercise or expiry of the warrants.

 

During the six month period ended June 30, 2018 the Company issued 200,000 warrants exercisable at USD $16.80, which expire on January 22, 2021.

 

A reconciliation of the changes in fair values of the derivative liability is below:

 

   June 30
2018
 
Balance, beginning  $3,655,690 
Warrants issued   676,967 
Changes in fair value of derivative liabilities   (3,026,054)
Balance, ending$  $1,306,603 

 

The fair value of the warrants was calculated using a Black-Scholes Option Pricing Model. The weighted average assumptions used in the Black-Scholes Option Pricing Model are:

 

  

 

At Issue

   June 30
2018
 
Fair value of related warrants outstanding  $3,627,968   $1,306,603 
Risk-free interest rate   1.96%   2.04%
Expected term (in years)   3    2.63 
Expected share price volatility   60%   60%

 

11.         Share capital

 

Authorized share capital

Unlimited number of common shares without par value.

 

On May 15, 2018 the Company completed a share consolidation of two pre-split common shares for one post-split common share. Previously, on June 22, 2016, the Company completed a share split of one pre-split common share for five post-split shares. All information related to common shares, options, warrants and per share amounts presented in these financial statements and accompanying notes have been retroactively adjusted to reflect the revised number of common shares resulting from the share split and subsequent share consolidation.

 

Issued share capital

At June 30, 2018 the Company had 25,060,133 issued and outstanding common shares (December 31, 2017 – 23,794,106).

 

During the six month period ended June 30, 2018, the Company issued a total of 1,182,543 common shares for gross proceeds of $6,897,647 and 75,000 common shares for services with a fair value of $622,777. Share issue costs related to these issuances was $698,051 and includes 2,286 common shares issued for finder’s fees with a fair value of $23,678. On exercise of 6,198 stock options included in the above, $19,274 was allocated to share capital from share-based payment reserve.

 

  13

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

Basic and fully diluted loss per share

 

The calculation of basic and fully diluted loss per share for the six month period ended June 30, 2018 was based on the loss attributable to common shareholders of $5,020,189 and the weighted average number of common shares outstanding of 24,571,944. Fully diluted loss per share did not include the effect of stock options and warrants as the effect would be anti-dilutive.

 

Stock options

 

The Company has adopted an incentive stock option plan, which provides that the Board of Directors of the Company may from time to time, in its discretion, grant to directors, officers, employees and technical consultants to the Company, non-transferable stock options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 30,000,000. Such options will be exercisable for a period of up to 7 years from the date of grant. Options may be exercised no later than 90 days following cessation of the optionee’s position with the Company.

 

Options granted typically vest one-quarter on the first anniversary subsequent to the grant date and the remaining three-quarters typically vest in thirty-six equal monthly instalments commencing on the first anniversary of the grant date.

 

On exercise, each option allows the holder to purchase one common share of the Company.

 

The changes in options during the six month period ended June 30, 2018 are as follows:

 

   June 30, 2018 
   Number of options   Weighted average exercise price 
Options outstanding, beginning   28,598,750   $0.40 
Options granted   502,500   USD 9.42 
Options exercised   (6,198)   2.00 
Options expired and forfeited   (26,302)   4.82 
Options outstanding, ending   29,068,750   $0.60 

 

Details of options outstanding as at June 30, 2018 are as follows:

 

Exercise price   Weighted average 
contractual life
   Number of options
outstanding
   Number of 
options
exercisable
 
$0.30    3.95 years    22,500,000    17,343,750 
$0.30    4.12 years    1,331,250    970,703 
$0.80    4.45 years    4,200,000    2,712,500 
$0.80    4.69 years    12,500    7,292 
$2.00    4.98 years    12,500    7,032 
$2.00    5.64 years    470,000    191,927 
$2.00    6.11 years    50,000    - 
USD $9.60    6.52 years    342,500    62,500 
USD $9.00    6.80 years    150,000    37,500 
      4.12 years    29,068,750    21,333,204 

 

The weighted average grant date fair value of options granted during the six month period ended June 30, 2018 was $3.05. The fair value was calculated using the Black-Scholes option pricing model using the following weighted average assumptions:

 

   Period ended June 30, 2018 
Expected life of options   5 years 
Annualized volatility   60%
Risk-free interest rate   2.90%
Dividend rate   0%

 

During the six month period ended June 30, 2018, the Company recognized stock-based compensation expense of $1,884,415 (June 30, 2017 - $537,379).

  

  14

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

Warrants

 

On exercise, each warrant allows the holder to purchase one common share of the Company.

 

The changes in warrants during the six month period ended June 30, 2018 are as follows:

 

   June 30, 2018 
   Number of warrants   Weighted average exercise price 
Warrants outstanding, beginning   11,856,858   $4.70 
Warrants issued   625,405    15.07 
Warrants outstanding, ending   12,482,263   $5.25 

 

At June 30, 2018, all warrants outstanding were exercisable. Details of warrants outstanding as at June 30, 2018 are as follows:

 

Exercise price  Weighted average 
contractual life
   Number of  warrants
outstanding
 
$ 0.80 CAD - $16.00 CAD   3.22 years    11,281,966 
$2.00 USD - $24.00 USD   2.60 years    1,200,298 

 

12.        Reserve

 

Share-based payment reserve

The share-based payment reserve records items recognized as stock-based compensation expense and other share-based payments until such time that the stock options or warrants are exercised, at which time the corresponding amount will be transferred to share capital. If the options, or warrants expire unexercised, the amount remains in the share-based payment reserve account.

 

13.         General and administrative expenses

 

   3 months ended   6 months ended 
   June 30,
2018
   June 30,
2017
   June 30,
2018
   June 30,
2017
 
Rent  $85,919   $62,409   $173,041   $120,693 
Office expenses   139,362    28,648    376,312    60,697 
Legal and professional   244,194    176,552    509,163    353,405 
Consulting fees   230,831    93,564    374,096    186,908 
Investor relations   72,325    18,354    162,383    40,577 
Salaries   161,625    65,619    314,478    165,675 
   $934,256   $445,146   $1,909,473   $927,955 

 

14.         Research and development expenses

 

   3 months ended   6 months ended 
   June 30,
2018
   June 30,
2017
   June 30,
2018
   June 30,
2017
 
Labour  $841,866   $454,914   $1,527,434   $904,337 
Materials   879,798    256,407    1,759,972    1,194,247 
Government grants   (3,065)   (90,000)   (8,630)   (193,534)
   $1,718,599   $621,321   $3,278,776   $1,905,050 

 

  15

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

15.         Sales and marketing expenses

 

   3 months ended   6 months ended 
   June 30,
2018
   June 30,
2017
   June 30,
2018
   June 30,
2017
 
Consulting  $57,294   $30,444   $119,515   $51,718 
Marketing   64,875    46,400    213,854    81,927 
Salaries   74,445    89,128    142,875    156,593 
   $196,614   $165,972   $476,244   $290,238 

 

16.         Segmented information

 

The Company operates in two reportable business segments in Canada.

 

The two reportable business segments offer different products, require different production processes, and are based on how the financial information is produced internally for the purposes of making operating decisions. The following summary describes the operations of each of the Company’s reportable business segments:

 

·Electric Vehicles – development and manufacture of electric vehicles for mass markets, and
·Custom build vehicles – development and manufacture of high end custom built vehicles.

 

Sales between segments are accounted for at prices that approximate fair value. No business segments have been aggregated to form the above reportable business segments.

 

   3 months ended June 30, 2018   3 months ended June 30, 2017 
   Electric Vehicles   Custom Built
Vehicles
   Electric Vehicles   Custom Built
Vehicles
 
Revenue  $-   $279,366   $-   $- 
Gross profit   -    86,715    -    - 
Operating expenses   4,543,846    100,070    1,552,456    - 
Other items   (1,949,011)   8,028    22,511    - 
Net and comprehensive loss   2,594,832    21,383    1,574,967    - 

  

   6 months ended June 30, 2018   6 months ended June 30, 2017 
   Electric Vehicles   Custom Built
Vehicles
   Electric Vehicles   Custom Built
Vehicles
 
Revenue  $-   $445,499   $-   $- 
Gross profit   -    150,180    -    - 
Operating expenses   8,128,254    171,946    3,715,826    - 
Other items   (3,145,750)   15,919    48,710    - 
Net and comprehensive loss   4,982,504    37,685    3,764,536    - 

  

   June 30, 2018   December 31, 2017 
   Electric Vehicles   Custom Built
Vehicles
   Electric Vehicles   Custom Built
Vehicles
 
                 
Inventory  $-   $274,518   $-   $232,903 
Plant and equipment   4,680,237    25,279    1,370,350    23,333 

 

  16

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

17.         Related party transactions

 

Related party balances

The following amounts are due to related parties

 

   June 30,
2018
   December 31,
2017
 
Shareholder loan  $8,306   $10,383 
Due to related parties (Note 8)   78,993    16,814 
   $87,299   $27,197 

 

These amounts are unsecured, non-interest bearing and have no fixed terms of repayment.

 

Directors & key management personnel compensation

 

   3 months ended   6 months ended 
   June 30,
2018
   June 30,
2017
   June 30,
2018
   June 30,
2017
 
Directors fees  $45,601   $-   $45,601   $- 
Consulting fees   72,000    45,000    132,000    90,000 
Salary   88,000    51,000    176,000    102,000 
Deferred salary for CEO   -    15,000    -    30,000 
Stock-based compensation   510,566    224,255    632,128    426,892 
   $705,667   $335,255   $985,729   $648,892 

 

18.         Financial instruments and financial risk management

 

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

 

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash and cash equivalents held in bank accounts. The majority of cash is deposited in bank accounts held with major financial institutions in Canada. As most of the Company’s cash is held by one financial institution there is a concentration of credit risk. This risk is managed by using major financial institutions that are high credit quality financial institutions as determined by rating agencies. The Company’s secondary exposure to risk is on its receivables. This risk is minimal as receivables consist primarily of government grant and refundable government goods and services taxes.

 

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents.

 

Historically, the Company's source of funding has been shareholder loans and the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding.

 

The following is an analysis of the contractual maturities of the Company’s non-derivative financial liabilities as at June 30, 2018:

 

At June 30, 2018  Within one year   Between one 
and five years
   More than
five years
 
Trade payables  $1,232,060   $-   $- 
Customer deposits   410,774    -    - 
Shareholder loan   8,306    -    - 
   $1,651,140   $-   $- 

 

  17

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

At December 31, 2017  Within one year   Between one 
and five years
   More than
five years
 
Bank loan  $123,637   $-   $- 
Trade payables   474,334    -    - 
Customer deposits   447,071    -    - 
Shareholder loan   10,383    -    - 
Promissory note   1,500,000    -    - 
   $2,555,425   $-   $- 

 

Foreign exchange risk

Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. The Company is exposed to currency risk as it incurs expenditures that are denominated in US dollars while its functional currency is the Canadian dollar. The Company does not hedge its exposure to fluctuations in foreign exchange rates.

 

The following is an analysis of Canadian dollar equivalent of financial assets and liabilities that are denominated in US dollars:

 

   June 30,
2018
   December 31,
2017
 
Cash and cash equivalents  $2,327,867   $5,596,635 
Trade receivables   136,374    - 
Trade payables   (806,307)   (138,794)
   $1,657,934   $5,457,841 

 

Based on the above net exposures, as at June 30, 2018, a 10% change in the US dollars to Canadian dollar exchange rate would impact the Company’s net loss by $165,793 (December 31, 2017 - $545,784).

 

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its cash equivalents as these instruments have original maturities of twelve months or less and are therefore exposed to interest rate fluctuations on renewal. A 1% change in market interest rates would have an impact on the Company’s net loss of $1,000 for the six month period ended June 30, 2018 (December 31, 2017 - $18,950).

 

Classification of financial instruments

Financial assets included in the statement of financial position are as follows:

 

   June 30,
2018
   December 31,
2017
 
Loans and receivables:          
Cash and cash equivalents  $4,235,315   $8,610,996 
Receivables   627,677    243,639 
   $4,862,992   $8,854,635 

 

Financial liabilities included in the statement of financial position are as follows:

 

   June 30,
2018
   December 31,
2017
 
Non-derivative financial liabilities:          
Bank loan  $-   $123,637 
Trade payable including amounts due to related parties   1,232,060    474,334 
Customer deposits   410,774    447,071 
Shareholder loan   8,306    10,383 
Promissory note   -    1,500,000 
Derivative financial liabilities:          
Warrant derivative liability   1,306,603    3,655,686 
   $2,957,743   $6,2111,111 

 

  18

 

  

Electrameccanica Vehicles Corp.

Notes to the Interim Consolidated Financial Statements

(Unaudited - Expressed in Canadian dollars)

For the six months ended June 30, 2018

 

Fair value

The fair value of the Company’s financial assets and liabilities approximates the carrying amount.

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

·Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
·Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
·Level 3 – Inputs that are not based on observable market data.

 

Financial liabilities measured at fair value at June 30, 2018 consisted of the derivative liability, which is measured using level 3 inputs.

 

The fair value of the derivative liability was calculated using the Black-Scholes Option Pricing Model using volatility of a comparable company as an estimate of volatility.

 

19.         Capital management

 

The Company’s policy is to maintain a strong capital base so as to safeguard the Company’s ability to maintain its business and sustain future development of the business. The capital structure of the Company consists of equity. There were no changes in the Company’s approach to capital management during the year. The Company is not subject to any externally imposed capital requirements.

 

20.         Subsequent events

 

On July 18, 2018, the Company completed a private placement of 150,847 units at a price of USD $5.90 per unit for gross proceeds of USD $890,000 (CAD $1,171,162). Each unit was comprised of one common share and a warrant to purchase one additional common share at a price of $12.00. The Company paid third party finder’s fees of $116,590 relating to this private placement.

 

On July 19, 2018 the Company and certain executive officers entered into stock option cancellation agreements and agreed to cancel 21,477,273 stock options that were exercisable at $0.30 per share and 3,522,727 stock options that were exercisable at $0.80 per share.

 

On July 20, 2018, the Company completed a private placement of 54,746 units at a price of USD $5.90 per unit for gross proceeds of USD $323,000 (CAD $426,388). Each unit was comprised of one common share and a warrant to purchase one additional common share at a price of $12.00. The company paid third party finder’s fees of $42,313 relating to this private placement.

 

On July 31, 2018 the Company filed a F1/A Registration Statement with the Securities and Exchange Commission, which was declared effective on August 3, 2018.

 

On August 8, 2018, the Company entered into an underwriting agreement with respect to an underwritten public offering of 2,353,000 units at a price of USD $4,25 per unit for gross proceeds of USD $10 million, and expected net proceeds of USD $8.8 million, which closed on August 13, 2018. Each unit was comprised of one common share and two warrants each to purchase one additional common share at a price of USD $4.25 for a period of five years from issue. The underwriters also have a 45-day option to purchase up to an additional 352,950 common shares and/or warrants to purchase up to an additional 705,900 common shares, representing 15% of the common shares sold in the public offering and 15% of the warrants sold in the public offering.

 

Under the underwriting agreement and related “lock-up” agreements, the Company, each director and executive officer of the Company, and certain shareholders have agreed not to sell, transfer or otherwise dispose of securities of the Company, without the prior written consent of underwriters for a period of 180 days after the date of the underwriting agreement.

 

The common shares and the warrants have been approved to list on the Nasdaq Capital Market under the symbols SOLO and SOLOW, respectively, and began trading on August 9, 2018.

 

On August 8, 2018 the Company granted stock options to acquire 275,000 common shares of the Company at an exercise price of USD $6.18 for a period of 7 years. The options vest over a 48 month period.

  

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