Current report of foreign issuer pursuant to Rules 13a-16 and 15d-16 Amendments

Plant and equipment

v3.19.3
Plant and equipment
9 Months Ended
Sep. 30, 2019
Plant and equipment  
Plant and equipment

5.Plant and equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Computer

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Furniture

 

hardware

 

 

 

 

 

 

 

 

 

 

Production

 

 

 

 

 

and

 

and

 

 

 

 

Leasehold

 

Right-of-

 

tooling and

 

 

 

 

 

equipment

 

software

 

Vehicles

 

Improvements

 

use assets

 

molds

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

At December 31, 2017

 

 

290,843

 

 

73,654

 

 

390,050

 

 

101,200

 

 

 —

 

 

914,060

 

 

1,769,807

Additions

 

 

203,644

 

 

59,749

 

 

 —

 

 

283,141

 

 

 —

 

 

3,635,888

 

 

4,182,422

Disposals

 

 

 —

 

 

 —

 

 

(2,001)

 

 

 —

 

 

 —

 

 

 —

 

 

(2,001)

December 31, 2018

 

 

494,487

 

 

133,403

 

 

388,049

 

 

384,341

 

 

 —

 

 

4,549,948

 

 

5,950,228

Additions

 

 

75,982

 

 

93,128

 

 

 —

 

 

116,665

 

 

2,085,844

 

 

3,271,043

 

 

5,640,512

Disposals

 

 

 —

 

 

(2,150)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(2,150)

September 30, 2019

 

 

570,469

 

 

224,381

 

 

388,049

 

 

501,006

 

 

2,085,844

 

 

7,820,991

 

 

11,590,740

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

At December 31, 2017

 

 

188,606

 

 

27,147

 

 

85,764

 

 

74,607

 

 

 —

 

 

 —

 

 

376,124

Charge for the year

 

 

42,192

 

 

38,542

 

 

129,487

 

 

40,117

 

 

 —

 

 

 —

 

 

250,338

At December 31, 2018

 

 

230,798

 

 

65,689

 

 

215,251

 

 

114,724

 

 

 —

 

 

 —

 

 

626,462

Additions

 

 

58,041

 

 

45,064

 

 

95,582

 

 

88,406

 

 

505,452

 

 

 —

 

 

792,545

Disposals

 

 

 —

 

 

(1,254)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,254)

September 30, 2019

 

 

288,839

 

 

109,499

 

 

310,833

 

 

203,130

 

 

505,452

 

 

 —

 

 

1,417,753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book value:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

At December 31, 2018

 

$

263,689

 

$

67,714

 

$

172,798

 

$

269,617

 

$

 —

 

$

4,549,948

 

$

5,323,766

At September 30, 2019

 

$

281,630

 

$

114,882

 

$

77,216

 

$

297,876

 

$

1,580,392

 

$

7,820,991

 

$

10,172,987

 

On September 29, 2017, the Company entered into a manufacturing agreement with Chongqing Zongshen Automobile Co., Ltd. (“Zongshen”). Under the agreement, the Company agreed to reimburse Zongshen for the cost of prototype tooling and molds estimated to be CNY ¥9.5 million ($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 ¥39.3 million ($7.8 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. As at September 30, 2019, the Company has completed the prototype tooling and molds with actual cost of CNY ¥10.1 million ($1.9) million), as assessed by the company, the prototype tooling and molds will be used for the mass production. The Company has paid 90% of prototype tooling and molds and 78% of the mass production tooling and molds. Depreciation on the production tooling and molds is charged on a per unit produced basis and during the period no units had been produced using the 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: 5,000 over a 12 month period from the start of mass production; over the next 12 month period, 20,000; and over the next 12 month period, 50,000, and which shall be payable following issue of Company’s purchase orders as follows: 30% 60 days prior to scheduled Zongshen production, and 70% after accepted vehicle delivery.

On October 16, 2017, the CEO of the Company (“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 ($1.8 million) to Zongshen through the pledge of 400,000 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.