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

Plant and equipment

v3.19.1
Plant and equipment
12 Months Ended
Dec. 31, 2018
Plant and Equipment [Abstract]  
Plant and equipment
6. Plant and equipment

 

    Furniture
and
equipment
    Computer
hardware
and
software
    Vehicles     Leasehold
Improvements
    Production
tooling
and molds
    Total  
                                     
Cost:                                                
At December 31, 2016   $ 44,209     $ 18,897     $ 173,213     $ 12,146     $ -     $ 248,465  
Additions     246,634       54,757       216,837       89,054       914,060       1,521,342  
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       4,180,422  
Disposals     -       -       (2,001 )     -       -       -  
December 31, 2018     494,487       133,403       388,049       384,341       4,549,948       5,950,228  
                                                 
Amortization:                                                
At December 31, 2016     7,112       2,514       11,666       1,904       -       23,196  
Charge for the year     181,494       24,633       74,098       72,703       -       352,928  
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  
                                                 
Net book value:                                                
At December 31, 2017   $ 102,237     $ 46,507     $ 304,286     $ 26,593     $ 914,060     $ 1,393,683  
At December 31, 2018   $ 263,689     $ 67,714     $ 172,798     $ 269,617     $ 4,549,948     $ 5,323,766  

 

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 ($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. At December 31, 2018, the Company had paid 90% of prototype tooling and molds and 36% 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: starting in third quarter of 2019, 5,000 over a 12 month period; in 2020 over the next 12 month period, 20,000; and in 2021 over the next 12 month period, 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 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.